As filed with the Securities and Exchange Commissionon September 11, 2023

Registration No. 333-          

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIESACT OF 1933

TenonMedical, Inc.

(Exact name of registrant as specified in its charter)

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 telephonenumber, including area code, of agent for service)

Copies to:

Approximate date of commencement of proposed saleto the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on thisForm are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☒

If this Form is filed to register additional securitiesfor an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registrationstatement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filedpursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number ofthe earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filedpursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number ofthe earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrantis a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registranthas elected not to use the extended transition period for complying with any new or revised financial accounting standards provided toSection 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this RegistrationStatement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendmentwhich specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the SecuritiesAct of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section8(a), may determine.

The information in thisprospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securitiesand Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buythese securities in any state or other jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION,DATED SEPTEMBER 11, 2023

PRELIMINARY PROSPECTUS

5,989,087 Shares of Common Stock

Tenon Medical, Inc.

This prospectus relatesto the resale, from time to time, of up to 5,989,087 shares of our common stock, par value $0.0001 per share, by the selling stockholder, LincolnPark Capital Fund, LLC (“Lincoln Park” or the “Selling Stockholder”).

The shares of our common stock to which this prospectusrelates includes (i) 989,087 shares previously issued to Lincoln Park pursuant to a Purchase Agreement between us and Lincoln Park datedas of July 24, 2023 (the “Purchase Agreement”) as consideration for its irrevocable commitment to purchase our common stockunder the Purchase Agreement and (ii) 5,000,000 shares that may be issued to Lincoln Park pursuant to the Purchase Agreement.

We are not selling anysecurities under this prospectus and will not receive any proceeds from the sale of our shares of common stock by Lincoln Park. However,we will receive proceeds of up to $10.0 million from any sale of our common stock to Lincoln Park under the Purchase Agreement. See “LincolnPark Transaction” herein.

Lincoln Park is deemedan “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended, or the SecuritiesAct.

Lincoln Park may sellthe shares of common stock described in this prospectus in a number of different ways and at varying prices. See “Plan of Distribution”on page 96 for more information about how Lincoln Park may sell the shares of common stock being registered pursuant to this prospectus.

We have agreed to bearall of the expenses incurred in connection with the registration of the shares to which this prospectus relates. Lincoln Park will payor assume discounts, commissions, and fees of underwriters, selling brokers or dealer managers, if any, incurred in connection with thesale of shares of our common stock.

Our common stock is listedon The Nasdaq Capital Market under the symbol “TNON.” On September 8, 2023, the closing sale price of our common stock as reportedon The Nasdaq Capital Market was $0.263. You are urged to obtain current market quotations for the common stock.

We are an “emerginggrowth company” and a “smaller reporting company” under applicable Securities and Exchange Commission rules and, assuch, have elected to comply with certain reduced public company disclosure requirements for this prospectus and future filings. See “ProspectusSummary—Implications of Being an Emerging Growth Company and a Smaller Reporting Company.”

Our business and investmentin our common stock involve significant risks. These risks are described in the section titled “Risk Factors” beginningon page 9 of this prospectus.

Neither the Securitiesand Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracyor adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is            , 2023.

TABLE OF CONTENTS

We have not, and the selling stockholder has not,authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any freewriting prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide noassurance as to the reliability of, any other information that others may give to you. The information contained in this prospectus isaccurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock.

You should rely only on the information containedin this prospectus. No dealer, salesperson or other person is authorized to give information that is not contained in this prospectus.This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or saleis not permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of deliveryof this prospectus or of any sale of these securities.

ABOUTTHIS PROSPECTUS

Throughout this prospectus, unless otherwise designatedor the context suggests otherwise,

MarketData

Market data and certain industry data and forecastsused 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 forecastsgenerally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completenessof such information is not guaranteed. To our knowledge, certain third-party industry data that includes projections for future periodsdoes not consider the effects of the coronavirus. Accordingly, those third-party projections may be overstated and should not be givenundue weight. We have not independently verified any of the data from third party sources, nor have we ascertained the underlying economicassumptions relied upon therein. Similarly, internal surveys, industry forecasts and market research, which we believe to be reliablebased on our management’s knowledge of the industry, have not been independently verified. Forecasts are particularly likely tobe inaccurate, especially over long periods of time. In addition, we do not necessarily know what assumptions regarding general economicgrowth 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 anduncertainties 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.

 

The emergence of various SI-Joint surgical technologieshas generated a renewed discussion of SI-Joint issues. Of particular focus is the diagnostic protocol utilized to properly select patientsfor S-I 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 patientfails to respond to these steps the pain specialist may move to therapeutic injections of the SI-Joint. These injections may serve tolessen inflammation to the point that the patient is satisfied. However, the impact from these injections is often transient. In thiscase the patient is often referred to a trained physician to determine if the patient may be a candidate for surgical intervention. Aseries of provocative tests in clinic, combined with a specific injection protocol to isolate the SI-Joint as the pain generator is thenutilized to confirm the need for surgical intervention. Published literature has shown this technique to be a very effective step to determinethe best treatment to alleviate pain.

 

Limitations of Existing Treatment Options

 

Surgical fixation and fusion of the SI-Joint withan open surgical technique was first reported in 1908, with further reports in the 1920s. The open procedure uses plates and screws, requiresa 6 to 12-inch incision and is extremely invasive. Due to the invasiveness and associated morbidity, the use of thisprocedure is limited to cases involving significant trauma, tumor, etc.

 

Less invasive surgical options along with implantdesign began to emerge over the past 15 years. These options feature a variety of approaches and implant designs and have been met withvarying 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 ofthese technologies.

 

Commercialization

 

Tenon initiated its national commercial launchof the CATAMARAN™ SI-Joint Fusion System (“The CATAMARAN System”) in October 2022 to address what we believe is a largemarket opportunity. The CATAMARAN System includes instruments and implants designed to prepare and fixate the SI-Joint for fusion. TheCATAMARAN System is distinct from other competitive offerings in the following ways:

 

●

Transfixes the SI-Joint

 

●

Inferior / Posterior Sacroiliac Fusion Approach

 

●

Reduced Approach Morbidity

 

●

Direct And Visualized Approach to the SI-Joint

 

●

Single Implant “One and Done” Technique

 

●

Insertion Trajectory Away from the Neural Foramen

 

●

Insertion Trajectory Away from Major Lateral Vascular Structures

 

●

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 shownbelow:

 

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 facilitates ease of insertion

 

RISKFACTORS

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 financialperformance could be adversely affected, our actual results could differ materially from our expectations, and the price of our stockcould decline. The risks and uncertainties discussed below are not the only ones we face. There may be additional risks and uncertaintiesnot 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 ourfinancial statements and related notes, before making an investment decision. The statements contained in this prospectus that are nothistoric facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materiallyfrom those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financialcondition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and investors inour securities may lose all or part of their investment.

Risks Related to Our Business and Operations

We have incurred losses in the past, our financial statementshave been prepared on a going concern basis and we may be unable to achieve or sustain profitability in the future.

To date, we have financed our operations primarilythrough the issuance of public and private equity and convertible notes. We have devoted substantially all of our resources to researchand development, creating the infrastructure for a publicly traded medical device company, preparing for our national commercial launch,and clinical and regulatory matters for our products. There can be no assurances that we will be able to generate sufficient revenue fromour 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 beinga 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 donot achieve profitability, it will be more difficult for us to finance our business and accomplish our strategic objectives.

Our recurring losses from operations and negativecash flows raise substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accountingfirm included an explanatory paragraph in its report on our financial statements for the fiscal years ended, December 31, 2022 and2021, describing the existence of substantial doubt about our ability to continue as a going concern. Based upon our current operatingplan, we believe that our existing cash and cash equivalents will not be sufficient to fund our operating expenses and capital expenditurerequirements for the next 12 months. Further, even if we raise the maximum amount of cash proceeds in this offering, we still do not believethat we will have sufficient cash to fund our operating expenses and capital expenditure requirements for the next 12 months (see —RisksRelated to this Offering and Ownership of our Common Stock--Regardless of the amount of cash that is raised in this public offering,the Company will require additional financing in the future to continue as a going concern” below). Our expected futurecapital requirements may depend on many factors including expanding our clinician base, increasing the rate at which we train clinicians,the number of additional clinical papers initiated, and the timing and extent of spending on the development of our technology to increaseour product offerings. Accordingly, even if we raise the maximum offering amount, we will need additional funding to fund our operationsin the future and the funding amount and timing requirement for the receipt of such funds to continue our operations will depend in parton the amount of proceeds we receive in this offering. However, additional funds may not be available to us on acceptable terms on a timelybasis, 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 continueoperations.

We may seek funds through borrowings or throughadditional 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 restrictour operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, makecertain investments, and engage in certain merger, consolidation or asset sale transactions. Any future debt financing or additional equitythat we raise may contain terms that are not favorable to us or our stockholders.

Practice trends or other factors, includingCOVID-19, may cause procedures to shift from the hospital environment to ambulatory surgical centers (“ASCs”), where pressureon the prices of our products is generally more acute.

To protect health care professionals involvedin surgical care and their patients, we anticipate that more outpatient eligible procedures will be performed in ASCs during the impactof COVID-19, and as its acuity declines and the healthcare system returns to a more normalized state. Since patients do not stay overnightin 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 servicefor patients and health care providers, where the risk of transmission of the novel coronavirus can be more effectively controlled. BecauseASC facility fee reimbursement is typically less than facility fee reimbursement for hospitals, we typically experience more pressureon 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 theaverage prices we charge to hospitals. An accelerated shift of procedures using our products to ASCs as a result of the impact of COVID-19could adversely impact the average selling prices of our products and our revenues could suffer as a result.

If hospitals, clinicians, and other healthcareproviders are unable to obtain coverage and reimbursement from third-party payors for procedures performed using our products, adoptionof our products may be delayed, and it is unlikely that they will gain further acceptance.

Growing sales of our product depends on the availabilityof adequate coverage and reimbursement from third-party payors, including government programs such as Medicare and Medicaid, private insuranceplans, and managed care programs. Hospitals, clinicians, and other healthcare providers that purchase or use medical devices generallyrely 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 proceduresperformed with our products is central to the acceptance of our current and future products. We may be unable to sell our products ona profitable basis if third-party payors deny coverage, continue to deny coverage or reduce their current levels of payment, or if ourcosts for the product increase faster than increases in reimbursement levels.

Many private payors refer to coverage decisionsand payment amounts determined by the Centers for Medicare and Medicaid Services, or CMS, which administers the Medicare program, as guidelinesfor setting their coverage and reimbursement policies. By June 30, 2016, all Medicare Administrative Contractors were regularly reimbursingfor minimally invasive and/or open SI-Joint fusion. Private payors that do not follow the Medicare guidelines may adopt different coverageand reimbursement policies for procedures performed with our products. Private commercial payors have been slower to adopt positive coveragepolicies for minimally invasive and/or open SI-Joint fusion, and many private payors still have policies that treat the procedure as experimentalor investigational and do not regularly reimburse for the procedure. Future action by Centers for Medicare & Medicaid Services (“CMS”)or third-party payors may further reduce the availability of payments to physicians, outpatient surgery centers, and/or hospitals forprocedures using our products.

The healthcare industry in the United States hasexperienced a trend toward cost containment as government and private insurers seek to control healthcare costs. Payors are imposing lowerpayment rates and negotiating reduced contract rates with service providers and being increasingly selective about the technologies andprocedures they choose to cover. There can be no guarantee that we will be able to provide the scientific and clinical data necessaryto overcome these policies. Payors may adopt policies in the future restricting access to medical technologies like ours and/or the proceduresperformed 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 proceduresin which they are used.

If the reimbursement provided by third-partypayors to hospitals, clinicians, and other healthcare providers for procedures performed using our products is insufficient, adoptionand use of our products and the prices paid for our implants may decline.

When a Tenon procedure utilizing The CATAMARANSystem is performed, both the clinician and the healthcare facility, a hospital (inpatient or outpatient clinic), submit claims forreimbursement 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 fixedcosts of operation, including certain operating room personnel involved in the procedure, and other medical services care. If these costsexceed the facility reimbursement, the facility’s managers may discourage or restrict clinicians from performing the procedure inthe facility or using certain technologies, such as The CATAMARAN System, to perform the procedure.

The Medicare 2022 national average hospital inpatientpayment ranges from approximately $25,000 to approximately $59,000 depending on the procedural approach and the presence of Complicationand Comorbidity (CC)/Major Complication and Comorbidity (MCC).

The Medicare 2022 national average hospital outpatientclinic payment is $21,897. We believe that insurer payments to facilities are generally adequate for these facilities to offer The CATAMARANSystem. However, there can be no guarantee that these facility payments will not decline in the future. The number of proceduresperformed, and the prices paid for our implants may in the future decline if payments to facilities for SI-Joint fusions decline.

Clinicians are reimbursed separately for theirprofessional time and effort to perform a surgical procedure. Depending on the surgical approach, the incision size, type and extent ofimaging guidance, indication for procedure, and the insurer, The CATAMARAN System procedure may be reported by the clinician using anyone of the applicable following CPT® codes 27279, 27280, 27299. The Medicare 2022 national average payment for CPT® 27279 is $807and $1,325 for 27280. CPT® 27299 has no national valuation. Clinicians, however, can present a crosswalk to another procedure believedto 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 proceduresperformed with our products, if any payment is made at all. Similar to Medicaid, many private payors’ coverage and payment may differfrom one payer to another as well.

We believe that some clinicians view the currentMedicare reimbursement amount as insufficient for the procedure, given the work effort involved with the procedure, including the timeto diagnose the patient and obtain prior authorization from the patient’s health insurer when necessary. Many private payors requireextensive documentation of a multi-step diagnosis before authorizing SI-Joint fusion for a patient. We believe that some private payorsapply their own coverage policies and criteria inconsistently, and clinicians may experience difficulties in securing approval and coveragefor sacroiliac fusion procedures. Additionally, many private payors limit coverage for open SI-Joint fusion to trauma, tumors or extensivespine fusion procedures involving multiple levels. The perception by physicians that the reimbursement for SI-Joint fusion is insufficientto compensate them for the work required, including diagnosis, documentation, obtaining payor approval for the procedure, and burden ontheir office staff, may negatively affect the number of procedures performed and may therefore impede the growth of our revenues or causethem to decline.

We may not be able to convince physiciansthat The CATAMARAN System is an attractive alternative to our competitors’ products and that our procedure is an attractive alternativeto existing surgical and non-surgical treatments of the SI-Joint.

Clinicians play the primary role in determiningthe course of treatment in consultation with their patients and, ultimately, the product that will be used to treat a patient. In orderfor us to sell The CATAMARAN System successfully, we must convince clinicians through education and training that treatment with The CATAMARANSystem is beneficial, safe, and cost-effective for patients as compared to our competitors’ products. If we are not successful inconvincing clinicians of the merits of The CATAMARAN System, they may not use our product, and we will be unable to increase our salesand achieve or grow profitability.

Historically, most spine clinicians did not includeSI-Joint pain in their diagnostic work-up because they did not have an adequate surgical procedure to perform for patients diagnosed withthe condition. As a result, some patients with lower back pain resulting from SI-Joint dysfunction are misdiagnosed. We believe that educatingclinicians and other healthcare professionals about the clinical merits and patient benefits of The CATAMARAN System is an important elementof our growth. If we fail to effectively educate clinicians and other medical professionals, they may not include a SI-Joint evaluationas part of their diagnosis and, as a result, those patients may continue to receive unnecessary or only non-surgical treatment.

Clinicians may also hesitate to change their medicaltreatment practices for other reasons, including the following:

Furthermore, we believe clinicians may not widelyadopt The CATAMARAN System unless they determine, based on experience, clinical data, and published peer-reviewed publications, that surgicalintervention provides benefits or is an attractive alternative to non-surgical treatments of SI-Joint dysfunction. In addition, we believesupport of our products relies heavily on long-term data showing the benefits of using our product. If we are unable to provide that data,clinicians may not use our product. In such circumstances, we may not achieve expected sales and may be unable to achieve profitability.

Clinicians and payors may not find our clinicalevidence to be compelling, which could limit our sales, and on-going and future research may prove our product to be less safe and effectivethan initially anticipated.

All of the component parts of The CATAMARAN Systemhave either received premarket clearance under Section 510(k) of the U.S. Federal Food, Drug, and Cosmetic Act, or FDCA, or are exemptfrom premarket review. The 510(k) clearance process of the U.S. Food and Drug Administration, or FDA, requires us to document that ourproduct is “substantially equivalent” to another 510(k) -cleared product. The 510(k) process is shorter and typically requiresthe submission of less supporting documentation than other FDA approval processes, such as a premarket approval, or PMA, and does notusually require pre-clinical or clinical studies. Additionally, to date, we have not been required to complete clinical studies in connectionwith the sale of our product. For these reasons, clinicians may be slow to adopt our product, third-party payors may be slow to providecoverage, and we may be subject to greater regulatory and product liability risks. Further, future patient studies or clinical experiencemay indicate that treatment with our product does not improve patient outcomes. Such results would slow the adoption of our product byclinicians, significantly reduce our ability to achieve expected sales, and could prevent us from achieving profitability. Moreover, iffuture 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, changesin third-party coverage and reimbursement, healthcare provider consolidation, payor consolidation and the proliferation of “physician-owneddistributorships” may impact our ability to sell our product at prices necessary to support our current business strategies.

If competitive forces drive down the prices weare able to charge for our product, our profit margins will shrink, which will adversely affect our ability to invest in and grow ourbusiness. 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 proceduresusing our product are currently covered and reimbursed by third-party private and public payors, adverse changes in coverage and reimbursementpolicies that affect our product, discounts, and number of implants used may also drive our prices down and harm our ability to marketand sell our product.

We are unable to predict what changes will bemade 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 Medicareand 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 reductionin the number of The CATAMARAN System procedures performed.

Consolidation in the healthcare industry, includingboth third-party payors and healthcare providers, could lead to demands for price concessions or to the exclusion of some suppliers fromcertain of our markets, which could have an adverse effect on our business, results of operations, or financial condition. Because healthcarecosts have risen significantly over the past several years, numerous initiatives and reforms initiated by legislators, regulators, andthird-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 continueto become more intense. This in turn has resulted and will likely continue to result in greater pricing pressures and the exclusion ofcertain suppliers from important market segments as group purchasing organizations, independent delivery networks, and large single accountscontinue 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, resultingin further business consolidations and alliances among our customers, which may reduce competition, exert further downward pressure onthe price of our product, and adversely impact our business, results of operations, or financial condition. As we continue to expand intointernational markets, we will face similar risks relating to adverse changes in coverage and reimbursement procedures and policies inthose markets.

We operate in a very competitive businessenvironment and if we are unable to compete successfully against our existing or potential competitors, our sales and operating resultsmay be negatively affected and we may not grow.

Upon commercialization of our product, we willlikely be subject to intense competition. Many of our potential competitors are major medical device companies that have substantiallygreater financial, technical, and marketing resources than we do, and they may succeed in developing products that would render our productobsolete or non-competitive. In addition, many of these competitors have significantly longer operating histories and more establishedreputations than we do. Our field is intensely competitive, subject to rapid change and highly sensitive to the introduction of new productsor other market activities of industry participants. Our ability to compete successfully will depend on our ability to develop proprietaryproducts 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 competingproducts.

In the United States, we believe that our primarycompetitors 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 theSI-Joint that compete directly or indirectly with our product. If alternative treatments are, or are perceived to be, superior to ourproduct, sales of our product and our results of operations could be negatively affected. Some of our larger competitors are either publiclytraded or divisions or subsidiaries of publicly traded companies. These competitors may enjoy several competitive advantages over us,including:

New participants have increasingly entered themedical device industry. Many of these new competitors specialize in a specific product or focus on a particular market segment, makingit more difficult for us to increase our overall market position. The frequent introduction by competitors of products that are or claimto be superior to our product or that are alternatives to our existing or planned products may make it difficult to differentiate thebenefits of our product over competing products. In addition, the entry of multiple new products and competitors may lead some of ourcompetitors 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 ofnew products and enhancements, our product may become obsolete over time. If we are unable to develop innovative new products, maintaincompetitive pricing, and offer products that clinicians and other physicians perceive to be as reliable as those of our competitors, oursales or margins could decrease, thereby harming our business.

We currently manufacture (through thirdparties) 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 thanThe CATAMARAN System and related tools and instruments. Therefore, we are solely dependent on widespread market adoption of The CATAMARANSystem and we will continue to be dependent on the success of this single product for the foreseeable future. There can be no assurancethat The CATAMARAN System will gain a substantial degree of market acceptance among clinicians, patients or healthcare providers. Ourfailure to successfully increase sales of The CATAMARAN System or any other event impeding our ability to sell The CATAMARAN System, wouldresult in a material adverse effect on our results of operations, financial condition and continuing operations.

We have a limited operating history andmay face difficulties encountered by early-stage companies in new and rapidly evolving markets.

Even though we were formed in 2012 we are in theearly stages of building the infrastructure necessary to expand the national commercial launch of The CATAMARAN System. Accordingly, wehave a limited operating history upon which to base an evaluation of our business and prospects. In assessing our prospects, you mustconsider the risks and difficulties frequently encountered by early-stage companies in new and rapidly evolving markets, particularlycompanies engaged in the development and sales of medical devices. These risks include our inability to:

We can also be negatively affected by generaleconomic conditions. Because of our limited operating history, we may not have insight into trends that could emerge and negatively affectour business. As a result of these or other risks, our business strategy might not be successful.

Our sales volumes and our operating resultsmay fluctuate over the course of the year.

Since our national launch commenced in October2022, we have limited history with respect to how rapidly adoption of The CATAMARAN System will occur. Sales growth could be slower thanwe have projected. Our sales and results of operations will be affected by numerous factors, including, among other things:

Some of the products we may seek to develop andintroduce in the future will require FDA clearance or approval before commercialization in the United States. As a result, it will bedifficult for us to forecast demand for these products with any degree of certainty. In addition, we will be increasing our operatingexpenses as we expand our commercial capabilities. Accordingly, we may experience significant, unanticipated quarterly losses. If ourquarterly or annual operating results fall below the expectations of investors or securities analysts, the price of our common stock coulddecline substantially. Furthermore, any quarterly or annual fluctuations in our operating results may, in turn, cause the price of ourcommon stock to fluctuate substantially. Quarterly comparisons of our financial results may not always be meaningful and should not berelied upon as an indication of our future performance.

If we do not successfully implement ourbusiness strategy, our business and results of operations will be adversely affected.

Our business strategy was based on assumptionsabout the market that might prove wrong. We believe that various demographics and industry-specific trends will help drive growth in themarket and our business, but these demographics and trends have been and will continue to be uncertain. Actual demand for our productcould 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 onthe SI-Joint market may limit our ability to grow. In addition, in order to increase our sales, we will need to identify and contractwith independent sales representatives in existing and new regions as well, and in the future, commercialize new products. Moreover, wemay decide to alter or discontinue aspects of our business strategy and may adopt different strategies due to business or competitivefactors not currently foreseen, such as new medical technologies that would make our product obsolete. Any failure to implement our businessstrategy may adversely affect our business, results of operations, and financial condition.

Our business could suffer if we lose theservices of key members of our senior management, key advisors or personnel.

We are dependent upon the continued services ofkey members of our senior management and a number of key advisors and personnel. The loss of members of our senior management team, keyadvisors or personnel, or our inability to attract or retain other qualified personnel or advisors, could have a material adverse effecton our business, results of operations, and financial condition. We do not maintain “key person” insurance for any of ourexecutives or employees. In addition, several of the members of our executive management team are not subject to non-competition agreementsthat restrict their ability to compete with us. Accordingly, the adverse effect resulting from the loss of certain executives could becompounded by our inability to prevent them from competing with us.

Although it will be subject to lock-up agreementsand other restrictions on trading, a portion of the equity of our management team will not contain other contractual transfer restrictionsat the time of this offering and may become tradable after the expiration of the ninety (90) day lock-up agreement with the placementagent. 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 controlmay adversely affect manufacturing and distribution of our product.

The manufacture and distribution of our productis 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 affectsupply and delivery. Some of these risks include:

If any of these risks were to materialize, ourability to provide our product to customers on a timely basis would be adversely impacted.

We are dependent on a limited number ofcontract manufacturers, some of them single-source and some of them in single locations, for our product, and the loss of any of thesecontract manufacturers, or their inability to provide us with an adequate supply of products in a timely and cost-effective manner, couldmaterially adversely affect our business.

We rely on contract manufacturers to supply ourproduct. For us to be successful, our contract manufacturers must be able to provide us with product in substantial quantities, in compliancewith regulatory requirements, in accordance with agreed upon specifications, at acceptable prices, and on a timely basis. We have a limitedhistory with our current contract manufacturers and do not have long-term supply contracts with them. We are in the process of identifyingand evaluating new contract manufacturers for our product. The inability to find the required contract manufacturers or the time requiredto switch contract manufacturers could adversely affect sales.

In addition, our anticipated growth could strainthe ability of our contract manufacturers to deliver an increasingly large supply of product. Contract manufacturers often experiencedifficulties in scaling up production, including financial issues, or problems with production yields and quality control and assurance.

We use a small number of contract manufacturersfor our instruments. Our dependence on such a limited number of contract manufacturers exposes us to risks, including, among other things:

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 commercialdemand for our product in a timely manner, our ability to generate revenue would be impaired, market acceptance of our product could beadversely affected, and customers may instead purchase or use our competitors’ products. Additionally, we could be forced to seekalternative sources of supply.

Because of the nature of our internal qualitycontrol requirements, regulatory requirements, and the custom and proprietary nature of our product, we may not be able to quickly engageadditional or replacement contract manufacturers for our product and accessories. We may also be required to assess any potential newcontract manufacturer’s compliance with all applicable regulations and guidelines, which could further impede our ability to obtainour product in a timely manner. As a result, we could incur increased product costs, experience delays in deliveries of our product, sufferdamage to our reputation, and experience an adverse effect on our business and financial results. Failure of any of our contract manufacturersto meet our product demand level would limit our ability to meet our sales commitments to our customers and could have a material adverseeffect on our business.

We may also have difficulty obtaining similarproduct from other contract manufacturers that are acceptable to the FDA and the failure of our contract manufacturers to comply withstrictly enforced regulatory requirements could expose us to delays in obtaining clearances or approvals, regulatory action includingwarning letters, product recalls, termination of distribution, product seizures, civil, administrative, or criminal penalties. We couldincur delays while we locate and engage qualified alternative contract manufacturers, and we may be unable to engage alternative contractmanufacturers on favorable terms or at all. Any such disruption or increased expenses could harm our commercialization efforts and adverselyaffect our ability to generate sales.

In addition, we expect that most of our contractmanufacturers will operate at a facility in a single location and substantially all their inventory of component supplies and finishedgoods will be held at these locations. We, and our contract manufacturers, will take precautions to safeguard facilities, including acquiringinsurance, adopting health and safety protocols, and utilizing off-site storage of computer data. However, vandalism, terrorism, or anatural or other disaster, such as an earthquake, fire, or flood, could damage or destroy equipment or component supplies or finishedproduct, 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 ouror our contract manufacturers’ facilities could harm our business, financial condition, and operating results.

As our sales grow, our contract manufacturersmay encounter problems or delays in the manufacturing of our product or fail to meet certain regulatory requirements which could resultin an adverse effect on our business and financial results.

To become profitable, our contract manufacturesmust manufacture our product in adequate quantities in compliance with regulatory requirements and at an acceptable cost. Increasing theircapacity to manufacture and inspect our product may require them to improve internal efficiencies or require us to re-design or changethe specifications of our product. Our contract manufacturers may encounter several difficulties in increasing this capacity, including:

If we are unable to satisfy commercial demandfor The CATAMARAN System due to our contract manufacturer’s inability to manufacture and inspect our product, our ability to generaterevenue would be impaired, market acceptance of our product could be adversely affected and customers may instead purchase or use ourcompetitors’ products.

The size and future growth in the marketfor the SI-Joint fixation market have not been established based on market reports and our estimates are based on our own review and analysisof public information and may be smaller than we estimate, possibly materially. In addition, our estimates of cost savings to the economyand healthcare system as a result of The CATAMARAN System procedure are based on our internal estimates and market research and couldalso 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-partystudy that reliably reports the potential market size for the SI-Joint fixation market. Therefore, our estimates of the size and futuregrowth 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 toour procedure, is based on a number of internal and third-party studies, surveys, reports, and estimates. While we believe these factorshave historically provided and may continue to provide us with effective tools in estimating the total market for our product and proceduresand health cost savings, these estimates may not be correct and the conditions supporting our estimates may change at any time, therebyreducing the predictive accuracy of these underlying factors. For example, we have consulted with our clinical advisors and utilized publicinformation as the basis for our market projections. Additionally, the surveys we have conducted are based on a small number of respondentsand are not statistically significant and may have other limitations. The actual incidence of lower back pain, and the actual demand forour product or competitive products, could differ materially from our projections if our assumptions and estimates are incorrect. As aresult, our estimates of the size and future growth in the market for our product may prove to be incorrect. In addition, actual healthcost savings to the healthcare system as a result of The CATAMARAN System procedure may materially differ from those presented in thisprospectus. If the actual number of people with lower back pain who would benefit from The CATAMARAN System and the size and future growthin the market and related costs savings to the healthcare system is smaller than we have estimated, it may impair our projected salesgrowth and have an adverse impact on our business.

In the future our product may become obsolete,which would negatively affect operations and financial condition.

The medical device industry is characterized byrapid and significant change. There can be no assurance that other companies will not succeed in developing or marketing devices, andproducts 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 newproducts. Product development involves a high degree of risk and there can be no assurance that our new product development efforts willresult in any commercially successful products.

If we experience significant disruptionsin our information technology systems, our business, results of operations, and financial condition could be adversely affected.

The efficient operation of our business dependson our information technology systems. We will rely on our information technology systems to effectively manage:

Our information technology systems are vulnerableto damage or interruption from:

The failure of our information technology systemsto perform as we anticipate or our failure to effectively implement new systems could disrupt our entire operation and could result indecreased sales, increased overhead costs, excess inventory and product shortages, and legal liability issues, all of which could havea material adverse effect on our reputation, business, results of operations, and financial condition.

We may seek to grow our business throughacquisitions of or investments in new or complementary businesses, products or technologies, and the failure to manage acquisitions orinvestments, or the failure to integrate them with our existing business, could have a material adverse effect on us.

From time to time, we expect to consider opportunitiesto acquire or make investments in other technologies, products, and businesses that may enhance our capabilities, complement our currentproduct, or expand the breadth of our markets or customer base. Potential and completed acquisitions and strategic investments involvenumerous risks, including:

We have no current commitments with respect toany acquisition or investment. We do not know if we will be able to identify acquisitions, we deem suitable, whether we will be able tosuccessfully complete any such acquisitions on favorable terms or at all, or whether we will be able to successfully integrate any acquiredbusiness, product, or technology into our business or retain any key personnel, suppliers, or distributors. Our ability to successfullygrow through acquisitions depends upon our ability to identify, negotiate, complete, and integrate suitable target businesses and to obtainany necessary financing. These efforts could be expensive and time consuming and may disrupt our ongoing business and prevent managementfrom 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-licensingarrangements, joint ventures, strategic alliances, or partnerships with third-parties that may not result in the development of commerciallyviable products or the generation of significant future revenue.

In the ordinary course of our business, we mayenter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, partnerships, or other arrangements to developproducts and to pursue new markets. We have not entered into any collaboration arrangements to date. Proposing, negotiating, and implementingcollaborations, 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, maycompete with us for these opportunities or arrangements. We may not identify, secure, or complete any such transactions or arrangementsin a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge and experience withrespect 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 andcould be terminated prior to developing any products.

Additionally, we may not be able to exercise soledecision-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 businessinterests or goals. It is possible that conflicts may arise with our collaborators, such as conflicts concerning the achievement of performancemilestones, or the interpretation of significant terms under any agreement, such as those related to financial obligations or the ownershipor control of intellectual property developed during the collaboration. If any conflicts arise with any future collaborators, they mayact in their self- interest, which may be adverse to our best interest, and they may breach their obligations to us. In addition, we mayhave limited control over the amount and timing of resources that any future collaborators devote to our or their future products.

Disputes between us and our collaborators mayresult in litigation or arbitration which would increase our expenses and divert the attention of our management. Further, these transactionsand arrangements will be contractual in nature and will generally be terminable under the terms of the applicable agreements and, in suchevent, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rightsat a premium. If we enter into in-bound intellectual property license agreements, we may not be able to fully protect the licensed intellectualproperty rights or maintain those licenses. Future licensors could retain the right to prosecute and defend the intellectual propertyrights licensed to us, in which case we would depend on the ability of our licensors to obtain, maintain and enforce intellectual propertyprotection for the licensed intellectual property. These licensors may determine not to pursue litigation against other companies or maypursue 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 informationtechnology, and our systems and infrastructure face certain risks, including cybersecurity and data leakage risks.

Significant disruptions to our information technologysystems 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 confidentialityand 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 informationtechnology systems and infrastructure and who may or could have access to our confidential information. The size and complexity of ourinformation technology systems, and those of our third-party vendors, make such systems potentially vulnerable to service interruptionsand security breaches from inadvertent or intentional actions by our employees, partners or vendors. These systems are also vulnerableto attacks by malicious third parties and may be susceptible to intentional or accidental physical damage to the infrastructure maintainedby us or by third parties. Maintaining the secrecy of confidential, proprietary and/or trade secret information is important to our competitivebusiness position. While we have taken steps to protect such information and have invested in systems and infrastructures to do so, therecan be no guarantee that our efforts will prevent service interruptions or security breaches in our systems or the unauthorized or inadvertentwrongful use or disclosure of confidential information that could adversely affect our business operations or result in the loss, disseminationor misuse of critical or sensitive information. A breach our security measures or the accidental loss, inadvertent disclosure, unapproveddissemination, misappropriation or misuse of trade secrets, proprietary information or other confidential information, whether as a resultof 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, securitybreach, loss or disclosure of confidential information could result in financial, legal, business and reputational harm to us and couldhave a material adverse effect on our business, financial position, results of operations and/or cash flow.

Geopolitical conditions,including trade disputes and direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financialresults.

Recently, Russia initiatedsignificant military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and exportcontrols against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financialorganizations, and the U.S. and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actionsshould the conflict continue or worsen. It is not possible to predict the broader consequences of the conflict, including related geopoliticaltensions, and the measures and retaliatory actions taken by the U.S. and other countries in respect thereof as well as any counter measuresor retaliatory actions by Russia or Belarus in response, including, for example, potential cyberattacks or the disruption of energy exports,is likely to cause regional instability, geopolitical shifts, and could materially adversely affect regional economies and the globaleconomy. The situation remains uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actionstaken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our abilityto raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition,and results of operations.

Epidemic diseases including COVID-19, orthe perception of their effects could have a material adverse effect on our business, financial condition, results of operations, or cashflows.

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 continuedescalation of the outbreak of COVID-19 could also negatively affect hospital admission rates and the decision by patients to undergo electivesurgery, which could decrease demand for procedures using The CATAMARAN System and cause other disruptions to our business. Business disruptionscould include disruptions or restrictions on our ability to travel or to distribute our products, government orders suspending the performanceof elective surgical procedures such as The CATAMARAN System, inability of our customers to meet their financial commitments due to strainon 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 ourcustomers would likely impact our sales and operating results. In addition, a significant outbreak of an infectious disease in the humanpopulation 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 ofprocedures using The CATAMARAN System that are performed and have a material adverse effect on our business, financial condition, resultsof operations, or cash flows.

COVID-19 may have an adverse impact on the timingand success of the commercialization of The CATAMARAN System and our future operations as a result of preventive and precautionary measuresthat we may find necessary to take. There are numerous uncertainties associated with this COVID-19 outbreak, including the number of individualswho will become infected, the level of resistance to taking vaccines by significant portions of the population in the United States, theextent of the protective and preventative measures that have been put in place by both governmental entities and other businesses andthose that may be put in place in the future, the effect that general availability of vaccines, testing for COVID-19 and antibodies willenable relaxation of protective measures for a subset of the population, and numerous other uncertainties. We intend to continue to executeon our product development and strategic plans during the COVID-19 outbreak. However, the aforementioned uncertainties may result in delaysor modifications to our product development and strategic plans.

In addition, the COVID-19 pandemic has adverselyaffected, and may continue to adversely affect, the economies and financial markets of many countries, which may result in a period ofregional, national, and global economic slowdown or regional, national, or global recessions that could curtail or delay spending by hospitalsand affect demand for our products as well as increased risk of customer defaults or delays in payments. These market disruptions couldimpair our ability to raise capital, should our business experience a prolonged period of reduced revenue requiring additional capitalto sustain the business. COVID-19 and the current financial, economic, and capital markets environment, and future developments in theseand other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations, andcash 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-19pandemic may also further exacerbate certain of the risks described below.

Risks Related to Our Legal and Regulatory Environment

We and our contract manufacturers are subjectto extensive governmental regulation both in the United States and abroad, and failure to comply with applicable requirements could causeour business to suffer.

The medical device industry is regulated extensivelyby governmental authorities, principally the FDA and corresponding state and foreign regulatory agencies. The FDA and other U.S. and foreigngovernmental agencies regulate, among other things, with respect to medical devices:

The regulations to which we are subject are complexand have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability to carry on or expandour operations, difficulties achieving new product clearances, higher than anticipated costs or lower than anticipated sales.

Before we can market or sell a new regulated productor make a significant modification to an existing product in the United States, with very limited exception, we must obtain either clearanceunder Section 510(k) of the FDCA for Class II devices or approval of a premarket approval application from the FDA for a Class IIIdevice. In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to adevice 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 pathwayrequires an applicant to demonstrate the safety and effectiveness of the device based, in part, on extensive data, including, but notlimited to, technical, preclinical, clinical trial, manufacturing, and labeling data. The PMA process is typically required for devicesthat are deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices. Products that are approvedthrough a PMA application generally need FDA approval before they can be modified. Similarly, some modifications made to products clearedthrough 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 significantfees, unless exempt. The FDA’s 510(k) clearance process usually takes from three to 12 months but may last longer. The process ofobtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or evenlonger, from the time the application is submitted to the FDA until an approval is obtained. The process of obtaining domestic and internationalregulatory clearances or approvals to market a medical device can be costly and time consuming, and we may not be able to obtain theseclearances or approvals on a timely basis, if at all.

In the United States, all of the components toThe 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 productsthan we had expected, our product introductions or modifications could be delayed or cancelled, 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 wedo 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 premarketreview, the FDA may require us to submit a 510(k) or PMA in order to continue marketing the product. Further, even with respect to thosefuture products where a PMA is not required, we cannot assure you that we will be able to obtain the 510(k) clearances with respect tothose products.

The FDA can delay, limit or deny clearance orapproval of a device for many reasons, including:

In addition, the FDA may change its clearanceand approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay clearanceor 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 properregulatory 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 resultin 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 assessmentprocess, medical device manufacturers must carry out a clinical evaluation of their medical devices to verify that they comply with therelevant Essential Requirements covering safety and performance. A clinical evaluation includes an assessment of whether a medical device’sperformance is in accordance with its intended use and that the known and foreseeable risks linked to the use of the device under normalconditions are minimized and acceptable when weighed against the benefits of its intended purpose. The clinical evaluation conducted bythe 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 canbe obtained from (i) clinical studies conducted on the devices being assessed; (ii) scientific literature from similar deviceswhose equivalence with the assessed device can be demonstrated; or (iii) both clinical studies and scientific literature.

The FDA and other regulatory authorities havebroad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could dissuade some clinicians fromusing our product and adversely affect our reputation and the perceived safety and effectiveness of our product.

Failure to comply with applicable regulationscould jeopardize our ability to sell our product and result in enforcement actions such as:

Adverse action by an applicable regulatory agencythe 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 independent sales representativesmust 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 medicaldevice for which we have or obtain marketing clearance or approval. Through our arrangements with customers and third-party payors, weare exposed to the risk that our employees, independent contractors, principal investigators, consultants, vendors, or independent salesrepresentatives may engage in fraudulent or other illegal activity. Misconduct by these parties could include, among other infractionsor 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 financialinformation or data, other commercial or regulatory laws or requirements, and equivalent foreign rules. We plan to implement a complianceprogram, code of conduct, and associated policies and procedures, but it is not always possible to identify and deter misconduct by ouremployees and other third parties, and the precautions we plan to take to detect and prevent this activity may not be effective in controllingunknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from afailure to be in compliance with such laws or regulations, and government authorities may conclude that our business practices do notcomply 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 lawspertaining to healthcare fraud and abuse, including anti-kickback and false claims laws. Our relationships with clinicians, other healthcareprofessionals, and hospitals are subject to scrutiny under these laws.

Healthcare fraud and abuse laws and related regulationsare complex, and even minor irregularities can potentially give rise to claims that a statute or prohibition has been violated. The lawsthat may affect our ability to operate include:

If we or our employees are found to have violatedany of the above laws we may be subjected to administrative, civil and criminal penalties, including imprisonment, exclusion from participationin federal healthcare programs, such as Medicare and Medicaid, and significant fines, monetary penalties and damages, and damage to ourreputation. Additional information about these laws is provided in “Business—Regulation.”

We have entered into consulting agreements withclinicians who are also customers. We anticipate entering into additional agreements with clinicians who use our product as we continueto commercialize our product. The primary mission of these clinician advisors is research and development and clinician education. Medicaldevice technology development requires thoughtful clinician input from experienced healthcare professionals. Medical device clinicianeducation requires experienced faculty for didactic and anatomic lab activities in a peer-to-peer setting. We believe these engagementswill allow us to successfully meet the expectations of the physician community. In addition, a small number of clinicians (which are ormay become customers) own less than 1.0% of our stock, or were granted stock options which they either purchased in an arm’s lengthtransaction on terms identical to those offered to others or received from us as fair market value consideration for consulting servicesperformed. While all of these transactions were structured with the intention of complying with all applicable laws, including the federalAnti-Kickback Statute, state anti-kickback laws and other applicable laws, to the extent applicable, it is possible that regulatory agenciesmay view these transactions as prohibited arrangements that must be restructured, or discontinued, or for which we could be subject tosignificant penalties. We would be materially and adversely affected if regulatory agencies interpret our financial relationships withclinicians who order our product to be in violation of applicable laws and we were unable to comply with such laws, which could subjectus to, among other things, monetary penalties for non-compliance, the cost of which could be substantial.

In certain cases, federal and state authoritiespursue 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 cliniciansare permitted to use medical devices for indications other than those cleared or approved by the FDA, we are prohibited from promotingproducts for “off-label” uses. We market our product and provide promotional materials and training programs to cliniciansregarding the use of our product. If it is determined that our marketing, promotional materials or training programs constitute promotionof unapproved uses, we could be subject to significant fines in addition to regulatory enforcement actions, including the issuance ofa warning letter, injunction, seizure, criminal penalty, and damage to our reputation. Federal and state authorities also pursue actionsfor false claims based upon improper billing and coding advice or recommendations, as well as decisions related to the medical necessityof procedures, including the site-of-service where procedures are performed. Actions under the federal False Claims Act may also be broughtby whistleblowers under its qui tam provisions.

To enforce compliance with the federal laws, theU.S. Department of Justice has increased its scrutiny of interactions between healthcare companies and healthcare providers, which hasled to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Dealing with investigations canbe time and resource consuming and can divert management’s attention from the business. Additionally, if a healthcare company settlesan investigation with the Department of Justice or other law enforcement agencies, it may need to agree to additional onerous complianceand reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increaseour costs or otherwise have an adverse effect on our business. Even if we are not determined to have violated these laws, government investigationsinto these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our financialcondition and divert resources and the attention of our management from operating our business.

The scope and enforcement of these laws is uncertainand subject to rapid change. The shifting compliance environment and the need to build and maintain robust and expandable systems to complywith different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that we may run afoul of oneor more of the requirements or that federal or state regulatory authorities might challenge our current or future activities under theselaws. Additionally, we cannot predict the impact of any changes in these laws, whether or not retroactive.

Our failure to adequately protect personalinformation in compliance with evolving legal requirements could harm our business.

In the ordinary course of our business, we planto collect and store sensitive data, including legally protected personally identifiable information. We may collect this kind of informationduring the course of future clinical trials and for possible post-marketing safety vigilance, helping enable clinicians and their patientsto pursue claims for reimbursement for procedures using The CATAMARAN System and servicing potential warranty claims.

There are a number of state, federal, and internationallaws protecting the privacy and security of health information and personal data. These data protection and privacy-related laws and regulationsare evolving and may result in ever-increasing regulatory and public scrutiny of companies’ data practices and escalating levelsof enforcement and sanctions. As part of the American Recovery and Reinvestment Act 2009, or ARRA, Congress amended the privacy and securityprovisions 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, healthcare clearinghouses, and health insurance plans, collectively referred to as “covered entities,” and their “businessassociates,” or subcontractors who provide services to covered entities that involve the creation, use, maintenance, or disclosureof PHI. ARRA included significant increases in the penalties for improper use or disclosure of an individual’s PHI under HIPAA andextended enforcement authority to state attorneys general. The amendments also created notification requirements applicable to coveredentities and business associates in certain cases when PHI in their control has been inappropriately accessed or disclosed. In the caseof a breach of unsecured PHI, covered entities may be required to provide notification to individuals affected by the breach, federalregulators, and, in some cases, local and national media. In addition to HIPAA, most states have laws requiring notification of affectedindividuals and state regulators in the event of a breach of “personal information,” which is a broader class of informationthan 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 complicateour efforts to comply.

In addition, even when HIPAA does not apply, accordingto the FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practicesin or affecting commerce in violation of Section 5(a) of the FTCA, 15 U.S.C § 45(a). The FTC expects a company’s datasecurity measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size andcomplexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Medical data is consideredsensitive data that merits stronger safeguards. The FTC’s guidance for appropriately securing consumers’ personal informationis similar to what is required by the HIPAA Security Rule.

Our failure to comply with applicable laws andregulations, or to protect such data, could result in enforcement actions against us, including fines, imprisonment of company officialsand public censure, claims for damages by end-customers, and other affected individuals, and the imposition of integrity obligations andagency oversight, damage to our reputation, and loss of goodwill, any of which could harm on our operations, financial performance, andbusiness. Evolving and changing definitions of personal data and personal information, within the United States, and elsewhere, may limitor 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 practicesor the operation of our product, or if we expand into new regions and are required to comply with new requirements, we may need to expendresources in order to change our business operations, data practices, or the manner in which our product operates. Even the perceptionof privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of our product.

Even if our product isapproved by regulatory authorities if our contract manufacturers fail to comply with ongoing FDA, or if we experience unanticipated problemswith our products, these products could be subject to restrictions or withdrawal from the market.

Any product for which we obtain regulatory clearanceor approval, and the manufacturing processes, reporting requirements, post-approval clinical data, and promotional activities for suchproduct, 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 manufactureof 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 manufacturersto comply with applicable statutes and regulations, or the failure to timely and adequately respond to any adverse inspectional observationsor product safety issues, could result in, among other things, any of the following enforcement actions:

In addition, we may be required to conduct costlypost-market testing and surveillance to monitor the safety or effectiveness of our product, and we must comply with medical device reportingrequirements, including the reporting of adverse events and malfunctions related to our product. Later discovery of previously unknownproblems with our product, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturingproblems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling, restrictions on such productsor 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 approvalsproduct 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 ceaseor 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 constitutepromotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibitingfalse or fraudulent claims for payment of government funds.

If any of these actions were to occur it wouldharm our reputation and cause our product sales and profitability to suffer and may prevent us from generating revenue. Furthermore, ourkey component suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements, whichcould 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, butwe expect an inspection in the future.

Our employees, independent contractors,consultants, contract manufacturers, and our 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 our independent sales representatives may engage in fraudulent conductor other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorizedactivities to us that violates FDA regulations, including those laws requiring the reporting of true, complete and accurate informationto the FDA, manufacturing standards, federal and state healthcare laws and regulations, and laws that require the true, complete and accuratereporting 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 couldalso involve the improper use of individually identifiable information, including, without limitation, information obtained in the courseof clinical trials, which could result in regulatory sanctions and serious harm to our reputation. 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, and the precautionswe take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protectingus 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 actionscould 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 healthcareprograms, 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 methodsmust comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of off-label use. Physiciansmay use our product off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice ofmedicine. In the United States, the full indication for The CATAMARAN System is: “The Tenon Catamaran Sacroiliac Joint FixationSystem (CAT SIJ Fixation System) is intended for sacroiliac joint fusion for conditions including sacroiliac joint disruptions and degenerativesacroiliitis.” Contraindications are patients with the following conditions: skeletally immature spines; deformities; severe osteoporosis;morbid obesity, tumor resection and active infection at treatment site.

We believe that the specific surgical proceduresfor which our product are marketed fall within the scope of the surgical applications that have been cleared by the FDA. However, if theFDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify ourtraining or promotional materials, require us to stop promoting our product for those specific procedures until we obtain FDA clearanceor 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 authoritiesmight take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could resultin significant fines or penalties under other statutory authorities, such as laws prohibiting false or fraudulent claims for payment ofgovernment fund. In that event, our reputation could be damaged, and adoption of the product would be impaired. Although our policy isto refrain from statements that could be considered off-label promotion of our product, the FDA or another regulatory agency could disagreeand conclude that we have engaged in off-label promotion. In addition, the off-label use of our product may increase the risk of injuryto patients, and, in turn, the risk of product liability claims. Product liability claims are expensive to defend and could divert ourmanagement’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 devicereporting regulations, we are required to report to the FDA any information that our product may have caused or contributed to a deathor serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to deathor serious injury. If we fail to report these events to the FDA within the required timeframes, or at all, FDA could take enforcementaction against us. Any such adverse event involving our product or repeated product malfunctions may result in a voluntary or involuntarycorrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any correctiveaction, 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, resultsof operations, and financial condition.

Any adverse event involving our product in theUnited 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 adequatelyor prevent further malfunctions, in which case we may need to cease manufacture and distribution of the affected products, initiate voluntaryrecalls, 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 andcapital, distract management from operating our business, and may harm our reputation and financial results.

A recall of our product, either voluntarilyor at the direction of the FDA or the discovery of serious safety issues or malfunctions with our product, can result in voluntary correctiveactions or agency enforcement actions, which could have a significant adverse impact on us.

The FDA has the authority to require the recallof commercialized products in the event of material deficiencies or defects in design or manufacture or in the event that a product posesan unacceptable risk to health. Manufacturers may, under their own initiative, recall a product if any material deficiency in a deviceis found.

In the case of the FDA, the authority to requirea recall must be based on an FDA finding that there is an unreasonable risk of substantial public harm. In addition, foreign governmentalbodies 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 unacceptablerisk to health, component failures, manufacturing errors, design or labeling defects, or other deficiencies and issues. Recalls of anyof our product would divert managerial and financial resources and have an adverse effect on our reputation, results of operations, andfinancial condition, which could impair our ability to produce our product in a cost-effective and timely manner in order to meet ourcustomers’ demands. We may also be required to bear other costs or take other actions that may have a negative impact on our futuresales and our ability to generate profits.

The FDA requires that certain classificationsof recalls be reported to FDA within 10 working days after the recall is initiated. Companies are required to maintain certain recordsof recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls involving our product in the future that wedetermine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require us to report thoseactions 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 requirenew 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 thatcould 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 firstinstance. A manufacturer may determine that a modification could not significantly affect safety or effectiveness and does not representa major change in its intended use, so that no new 510(k) clearance is necessary. FDA may review any manufacturer’s decision andmay not agree with our decisions regarding whether new clearances or approvals are necessary. The FDA may also on its own initiative determinethat a new clearance or approval is required.

We have modified our product and have determinedbased on our review of the applicable FDA guidance that a new 510(k) clearances or PMAs is not required. If the FDA disagrees with ourdetermination and requires us to submit new 510(k) clearances or PMAs for modifications to our previously cleared products for which wehave concluded that new clearances or approvals are unnecessary, we may be required to cease marketing or to recall the modified productuntil we obtain clearance or approval, and we may be subject to significant enforcement action, regulatory fines, or penalties.

If a manufacturer determines that a modificationto 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 modificationsto our product require a new 510(k) clearance or premarket approval application, we may not be able to obtain those additional clearancesor approvals for the modifications or additional indications in a timely manner, or at all. FDA’s ongoing review of the 510(k) programsmay make it more difficult for us to make modifications to our previously cleared products, either by imposing more strict requirementson when a new 510(k) for a modification to a previously cleared product must be submitted or applying more onerous review criteria tosuch submissions.

Clinical trials necessary to support a 510(k)or reimbursement may require the enrollment 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 articlesto maintain coverage and lack of changes in reimbursement could materially slow down our commercial efforts and affect our revenue projections.

The results of our clinicaltrials may not support our product candidate claims or may result in the discovery of adverse side effects.

If our clinical trials are completed as planned,we cannot be certain that their results will support our product marketing claims or third party reimbursors will agree with our conclusionsregarding them. The clinical trial process may fail to demonstrate efficacy and cost effectiveness of our product and may hinder the adoptionof our product or ability to obtain payor coverage. It is also possible that patients enrolled in clinical trials will experience adverseside effects that are not currently part of the product candidate’s profile.

We may incur product liability losses, andinsurance coverage may be inadequate or unavailable to cover these losses.

Our business exposes us to potential product liabilityclaims that are inherent in the testing, design, manufacture, and sale of medical devices for SI-Joint surgery procedures. SI-Joint surgeryinvolves significant risk of serious complications, including bleeding, nerve injury, paralysis, and even death. In addition, if longer-termpatient results and experience indicates that our product or any component of such product cause tissue damage, motor impairment, or otheradverse effects, we could be subject to significant liability. Clinicians may misuse or ineffectively use our product, which may resultin unsatisfactory patient outcomes or patient injury. We could become the subject of product liability lawsuits alleging that componentfailures, manufacturing flaws, design defects, or inadequate disclosure of product-related risks or product-related information resultedin an unsafe condition or injury to patients. Product liability lawsuits and claims, safety alerts, or product recalls, regardless oftheir ultimate outcome, could have a material adverse effect on our business and reputation, our ability to attract and retain customersand our results of operations or financial condition.

Although we maintain third-party product liabilityinsurance coverage, it is possible that claims against us may exceed the coverage limits of our insurance policies or cause us to recorda self-insured loss. Even if any product liability loss is covered by an insurance policy, these policies typically have substantial retentionsor deductibles that we are responsible for. Product liability claims in excess of applicable insurance coverage could have a materialadverse effect on our business, results of operations, and financial condition.

In addition, any product liability claim broughtagainst us, with or without merit, could result in an increase of our product liability insurance rates. Insurance coverage varies incost and can be difficult to obtain, and we cannot guarantee that we will be able to obtain insurance coverage in the future on termsacceptable to us or at all.

We are subject to environmental laws andregulations that can impose significant costs and expose us to potential financial liabilities.

Our business and facility and those of our contractmanufacturer are subject to foreign, federal, state, and local laws and regulations relating to the protection of human health and theenvironment, 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 ourpast or present facilities and at third-party waste disposal sites even if such contamination was not caused by us. A failure to complywith current or future environmental laws and regulations could result in severe fines or penalties. Any such expenses or liability couldhave a significant negative impact on our business, results of operations, and financial condition.

U.S. tax legislation may materially affectour 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 deductionsand credits.

The Coronavirus Aid, Relief, and Economic SecurityAct (the “CARES Act”) modifies certain provisions of the Tax Act, including increasing the amount of interest expense thatmay be deducted.

The Tax Act as modified by the CARES Act is unclearin many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulationsby the Treasury and IRS, any of which could lessen or increase certain adverse impacts of the legislation. In addition, it is unclearhow these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a startingpoint for computing state and local tax liabilities. Our analysis and interpretation of this legislation is preliminary and ongoing andthere may be material adverse effects resulting from the legislation that we have not yet identified. While some of the changes made bythe tax legislation may adversely affect us, other changes may be beneficial. We continue to work with our tax advisors and auditors todetermine the full impact that the recent tax legislation as a whole will have on us. We urge our investors to consult with their legaland tax advisors with respect to such legislation and its potential effect on an investment in our common stock.

Risks Related to Our Intellectual Property

Our ability to protect our intellectualproperty and proprietary technology is uncertain.

We rely primarily on patent, copyright, trademarkand trade secret laws, as well as confidentiality and non-disclosure agreements and other methods, to protect our proprietary technologiesand know-how. As of September 11, 2023, we owned eight issued patents (four domestic and four foreign), eighteen pending patent applications (sixteendomestic and two foreign), thirteen registered trademarks (seven domestic and six foreign) and eleven pending domestic trademark applications.

We have applied for patent protection relatingto 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 bedesirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so later. Furthermore, wecannot assure you that any of our patent applications will be approved. The rights granted to us under our patents, including prospectiverights sought in our pending patent applications, may not be meaningful or provide us with any commercial advantage. In addition, thoserights could be opposed, contested, or circumvented by our competitors or be declared invalid or unenforceable in judicial or administrativeproceedings. The failure of our patents to adequately protect our technology might make it easier for our competitors to offer the sameor similar products or technologies. Competitors may be able to design around our patents or develop products that provide outcomes whichare 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 UnitedStates. Even if patents are granted outside the United States, effective enforcement in those countries may not be available. Since mostof our issued patents are for the United States only, we lack a corresponding scope of patent protection in other countries. In countrieswhere we do not have significant patent protection, we may not be able to stop a competitor from marketing products in such countriesthat are the same as or similar to our product.

We plan to rely on our trademarks, trade namesand brand names to distinguish our product from the products of our competitors and have registered or applied to register many of thesetrademarks. 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 torebrand our product, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketingnew brands. Further, we cannot assure you that competitors will not infringe upon our trademarks, or that we will have adequate resourcesto 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 confidentialityand intellectual property assignment agreements with parties that develop intellectual property for us and/or have access to it, suchas our officers, employees, consultants, contract manufacturers and advisors. However, in the event of unauthorized use or disclosureor 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 commercialpartners, collaborators, employees, and consultants use intellectual property owned by others in their work for us, disputes may ariseas to the rights in related or resulting know-how and inventions. If any of our trade secrets, know-how or other technologies not protectedby a patent were to be disclosed to or independently developed by a competitor, our business, financial condition, and results of operationscould be materially adversely affected.

In the future, we may enter into licensing agreementsto maintain our competitive position. If we enter into in-bound intellectual property license agreements, we may not be able to fullyprotect the licensed intellectual property rights or maintain those licenses. Future licensors could retain the right to prosecute anddefend 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 litigationagainst other companies or may pursue such litigation less aggressively than we would. Further, entering into such license agreementscould impose various diligence, commercialization, royalty, or other obligations on us. Future licensors may allege that we have breachedour license agreement with them, and accordingly seek damages or to terminate our license, which could adversely affect our competitivebusiness position and harm our business prospects.

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 rightscould be expensive and time consuming and could divert management’s attention from managing our business. Moreover, we may not havesufficient 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 maybe impractical for us to enforce this intellectual property against those third parties.

We may be subject to damages resulting fromclaims that we, our employees, or independent distributors along with their independent sales representatives have wrongfully used ordisclosed 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 employedat other medical device companies, including our competitors or potential competitors, in some cases until recently. Some independentdistributors and their independent sales representatives sell, or in the past have sold, products of our competitors. We may be subjectto claims that we, our employees or independent sales personnel have inadvertently or otherwise used or disclosed trade secrets or otherproprietary information of these former employers or competitors. In addition, we have been and may in the future be subject to claimsthat we caused an employee to breach the terms of his or her non-competition or non-solicitation agreement. Even if we are successfulin defending against these claims, litigation could result in substantial costs, divert the attention of management from our core businessand harm our reputation. If our defence to those claims fails, in addition to paying monetary damages, we may lose valuable intellectualproperty rights or personnel. There can be no assurance that this type of litigation will not continue, and any future litigation or thethreat thereof may adversely affect our ability to hire additional direct sales representatives. A loss of key personnel or their workproduct could hamper or prevent our ability to commercialize product candidates, which could have an adverse effect on our business, resultsof operations, and financial condition.

The medical device industry is characterizedby patent litigation, and we could become subject to litigation that could be costly, result in the diversion of management’s timeand 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 onnot infringing the patents or violating the other proprietary rights of third parties. Significant litigation regarding patent rightsexists in our industry. Our competitors in both the United States and abroad, many of which have substantially greater resources and havemade substantial investments in competing technologies, may have applied for or obtained or may in the future apply for and obtain, patentsthat will prevent, limit, or otherwise interfere with our ability to make and sell our product. We have conducted a limited review ofpatents issued to third parties. The large number of patents, the rapid rate of new patent issuances, the complexities of the technologyinvolved, and the uncertainty of litigation increase the risk of business assets and management’s attention being diverted to patentlitigation. Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significantstrain on our financial resources, divert the attention of management from our core business, and harm our reputation. Further, as thenumber 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, includingtreble, or triple, damages if an infringement is found to be willful, and/or royalties and could be prevented from selling our productunless we obtain a license or are able to redesign our product to avoid infringement. Any such license may not be available on reasonableterms, 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 intellectualproperty rights of others. If we fail to obtain any required licenses or make any necessary changes to our product or technologies, wemay have to withdraw our existing product from the market or may be unable to commercialize one or more of our future products, all ofwhich could have a material adverse effect on our business, results of operations, and financial condition. If passed into law, patentreform legislation currently pending in the U.S. Congress could significantly change the risks associated with bringing or defending apatent infringement lawsuit. For example, fee shifting legislation could require a non-prevailing party to pay the attorney fees of theprevailing party in some circumstances.

Patent terms are limited, and we may notbe 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 ofa patent, and the protection it affords, is limited. In addition, upon issuance in the U.S., the patent term may be extended based oncertain 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 wouldbe adversely affected.

Changes in U.S. patent law could diminishthe 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 devicesindustry involves both technological and legal complexity. Therefore, obtaining and enforcing patents is costly, time-consuming, and inherentlyuncertain. 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 patentowners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combinationof 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 ourability 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 intellectualproperty rights throughout the world.

Filing, prosecuting, and defending patents onproduct candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in somecountries outside the U.S. can be less extensive than those in the U.S. In addition, the laws of some foreign countries do not protectintellectual property rights to the same extent as federal and state laws in the U.S. Competitors may use our technologies in jurisdictionswhere we have not obtained patent protection to develop their own products and may also export otherwise infringing products to territorieswhere we have patent protection, but enforcement is not as strong as that in the U.S. These products may compete with our product andour patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problemsin protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularlycertain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularlythose relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing ofcompeting 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 couldprovoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remediesawarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the worldmay be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

If we are unable to protect the confidentialityof our trade secrets, our business and competitive position could be harmed.

In addition to patent protection, we also relyupon 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 contractualmeasures, we try to protect the confidential nature of our proprietary information using commonly accepted physical and technologicalsecurity measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third partywith authorized access, provide adequate protection for our proprietary information. Our security measures may not prevent an employeeor consultant from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such misconductmay not provide an adequate remedy to protect our interests fully. Unauthorized parties may also attempt to copy or reverse engineer certainaspects of our product that we consider proprietary. Enforcing a claim that a party illegally disclosed or misappropriated a trade secretcan 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 ourconfidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such informationwas independently developed by a competitor, our business and competitive position could be harmed.

Third parties may assert that our employeesor consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.

We employ individuals who previously worked withother companies, including our competitors or potential competitors. Although we try to ensure that our employees and consultants do notuse the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultantsor independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietaryinformation, of a former employer or other third party. Litigation may be necessary to defend against these claims. If we fail in defendingany such claims or settling those claims, in addition to paying monetary damages or a settlement payment, we may lose valuable intellectualproperty rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costsand be a distraction to management and other employees.

Risks Related to this Offering and Ownershipof our Common Stock

The sale or issuance of our common stockto Lincoln Park may cause dilution and the sale of the shares of common stock acquired by Lincoln Park, or the perception that such salesmay occur, could cause the price of our common stock to decrease.

On July 24, 2023, we entered into the PurchaseAgreement with Lincoln Park, pursuant to which Lincoln Park has committed to purchase up to $10.0 million of our common stock. Upon theexecution of the Purchase Agreement, we issued 989,087 Commitment Shares to Lincoln Park as a fee for its commitment to purchase sharesof our common stock under the Purchase Agreement. The shares of our common stock that may be issued under the Purchase Agreement may besold by us to Lincoln Park at our sole discretion from time to time over a 24-month period commencing after the satisfaction of certainconditions set forth in the Purchase Agreement. The purchase price for the shares that we may sell to Lincoln Park under the PurchaseAgreement will fluctuate based on the trading price of our common stock. Depending on market liquidity at the time, sales of such sharesmay cause the trading price of our common stock to decrease. We generally have the right to control the timing and amount of any futuresales of our shares to Lincoln Park. Additional sales of our common stock, if any, to Lincoln Park will depend upon market conditionsand other factors to be determined by us. We may ultimately decide to sell to Lincoln Park all, some or none of the additional sharesof our common stock that may be available for us to sell pursuant to the Purchase Agreement. If and when we do sell shares to LincolnPark, after Lincoln Park has acquired the shares, Lincoln Park may resell all, some or none of those shares at any time or from time totime in its discretion. Therefore, sales to Lincoln Park by us could result in substantial dilution to the interests of other holdersof our common stock. Additionally, the sale of a substantial number of shares of our common stock to Lincoln Park, or the anticipationof such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a pricethat we might otherwise wish to effect sales.

It is not possible to predict the actualnumber of shares we will sell under the Purchase Agreement to the selling stockholder, or the actual gross proceeds resulting from thosesales.

On July 24, 2023, we entered into the PurchaseAgreement with Lincoln Park, pursuant to which Lincoln Park has committed to purchase up to $10.0 million in shares of our common stock,subject to certain limitations and conditions set forth in the Purchase Agreement. The shares of our common stock that may be issued underthe Purchase Agreement may be sold by us to Lincoln Park at our discretion from time to time over an approximately 24-month period commencingon the Commencement Date.

We generally have the right to control the timingand amount of any sales of our shares of common stock to Lincoln Park under the Purchase Agreement. Sales of our common stock, if any,to Lincoln Park under the Purchase Agreement will depend upon market conditions and other factors to be determined by us. We may ultimatelydecide to sell to Lincoln Park all, some or none of the shares of our common stock that may be available for us to sell to Lincoln Parkpursuant to the Purchase Agreement.

Because the purchase price per share to be paidby Lincoln Park for the shares of common stock that we may elect to sell to Lincoln Park under the Purchase Agreement, if any, will fluctuatebased on the market prices of our common stock at the time we elect to sell shares to Lincoln Park pursuant to the Purchase Agreement,if any, it is not possible for us to predict, as of the date of this prospectus and prior to any such sales, the number of shares of commonstock that we will sell to Lincoln Park under the Purchase Agreement, the purchase price per share that Lincoln Park will pay for sharespurchased from us under the Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by Lincoln Parkunder the Purchase Agreement.

Moreover, although the Purchase Agreement providesthat we may sell up to an aggregate of $10.0 million of our common stock to Lincoln Park, only 5,989,087 shares of our common stock arebeing registered for resale by Lincoln Park under the registration statement that includes this prospectus, consisting of (i) the 989,087Commitment Shares that we previously issued to Lincoln Park upon execution of the Purchase Agreement as consideration for its commitmentto purchase our common stock at our direction under the Purchase Agreement, for which we have received no cash consideration, and (ii)up to 5,000,000 Purchase Shares that we may elect to sell to Lincoln Park, in our sole discretion, from time to time from and after theCommencement Date under the Purchase Agreement. If during the 24 month period after the Commencement Date we elect to sell to LincolnPark all of the 5,000,000 shares of common stock being registered for resale under this prospectus that are available for sale by us toLincoln Park in Regular Purchases under the Purchase Agreement, depending on the market prices of our common stock during the applicableRegular Purchase valuation period for each Regular Purchase made pursuant to the Purchase Agreement, the actual gross proceeds from thesale of all such shares may be substantially less than the $10 million total purchase commitment available to us under the Purchase Agreement,which could materially adversely affect our liquidity.

Additionally, under applicable Nasdaq rules, wemay not issue more than a maximum of 4,322,591 shares (which includes the 989,087 Commitment Shares we already issued) of our common stockto Lincoln Park under the Purchase Agreement (the “Exchange Cap”) unless either (i) we obtain shareholder approval to issueshares to Lincoln Park in excess of the Exchange Cap or (ii) the average per share purchase price paid by Lincoln Park for all sharesof common stock sold under the Purchase Agreement equals or exceeds $0.3051.

Furthermore, even assuming that we could issueshares of our common stock in excess of the Exchange Cap, if we elect to issue and sell to Lincoln Park more than the 5,000,000 PurchaseShares, we must first file with the SEC one or more additional registration statements to register under the Securities Act for resaleby Lincoln Park such additional shares of our common stock we wish to sell from time to time under the Purchase Agreement, which the SECmust declare effective, in each case before we may elect to sell any additional shares of our common stock to Lincoln Park under the PurchaseAgreement.

The Purchase Agreement also prohibits us from directing Lincoln Parkto purchase any shares of our common stock if those shares of our common stock, when aggregated with all other shares of our common stockthen beneficially owned by Lincoln Park and its affiliates, would result in Lincoln Park having beneficial ownership of more than 4.99%of the total outstanding shares of our common stock, as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3thereunder (the “Beneficial Ownership Cap”).

Any issuance and sale by us under the PurchaseAgreement of a substantial amount of shares of common stock in excess of the Exchange Cap or in excess of the 5,000,000 Purchase Sharesthat we may elect to issue and sell to Lincoln Park under the Purchase Agreement that are being registered for resale by Lincoln Parkhereunder could cause additional substantial dilution to our stockholders. The number of shares of our common stock ultimately offeredfor resale by Lincoln Park is dependent upon the number of shares of our common stock we ultimately decide to sell to Lincoln Park underthe Purchase Agreement.

Investors who buy shares at different timeswill likely pay different prices, and the sale of the shares of common stock acquired by Lincoln Park could cause the price of our commonstock to decline.

Pursuant to the Purchase Agreement, we will havediscretion, subject to market demand, to vary the timing, prices, and numbers of shares sold to Lincoln Park. If and when we do electto sell shares of our common stock to Lincoln Park pursuant to the Purchase Agreement, after Lincoln Park has acquired such shares, LincolnPark may resell all, some or none of such shares at any time or from time to time in its discretion and at different prices. As a result,investors who purchase shares from Lincoln Park in this offering at different times will likely pay different prices for those shares,and so may experience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results.Investors may experience a decline in the value of the shares they purchase from Lincoln Park in this offering as a result of future salesmade by us to Lincoln Park at prices lower than the prices such investors paid for their shares in this offering. Further, the sale ofa substantial number of shares of our common stock by Lincoln Park, or anticipation of such sales, could cause the trading price of ourcommon stock to decline or make it more difficult for us to sell equity or equity-related securities in the future at a time and at aprice that we might otherwise desire.

We may require additional financing to sustainour operations, without which we may not be able to continue operations, and the terms of subsequent financings may adversely impact ourstockholders.

We may direct Lincoln Park to purchase up to $10.0million worth of shares of our common stock in a Regular Purchase from time to time under the Purchase Agreement over a 24-month periodgenerally in amounts up to 100,000 shares of our common stock, which may be increased to up to 150,000 shares of our common stock dependingon the closing sale price of our common stock on Nasdaq at the time of sale; provided, however that Lincoln Park’s maximum purchaseobligation under any single Regular Purchase shall not exceed $500,000; provided, further, however, that we and Lincoln Park may mutuallyagree at any time to increase the maximum number of shares of common stock the Company may direct Lincoln Park to purchase in any singleRegular Purchase to up to 1,000,000 shares or any number of shares that shall not exceed 4.99% of the then outstanding shares of commonstock. Moreover, under certain circumstances as set forth in the Purchase Agreement, we may, in our sole discretion, also direct LincolnPark to purchase additional shares of common stock in Accelerated Purchases and Additional Accelerated Purchases as set forth in the PurchaseAgreement.

Depending on the prevailing market price of ourcommon stock, we may not be able to sell shares to Lincoln Park for the maximum $10.0 million over the term of the Purchase Agreement.We will need to seek stockholder approval before issuing more than the Exchange Cap limit of 4,520,310 shares of common stock under thePurchase Agreement, unless the average price per share of common stock for all shares of common stock sold by us to Lincoln Park underthe Purchase Agreement equals or exceeds $0.3051 per share (representing the lower of the official closing price of the common stock onNasdaq on the trading day immediately preceding the date of the Purchase Agreement and the average official closing price of the commonstock on Nasdaq for the five consecutive trading days ending on the trading day immediately preceding the date of the Purchase Agreement,as adjusted under applicable Nasdaq rules to take into account the issuance of Commitment Shares to Lincoln Park for non-cash consideration),such that the Exchange Cap limitation would no longer apply to issuances and sales of common stock by us to Lincoln Park under the PurchaseAgreement under applicable Nasdaq listing rules. In addition, Lincoln Park will not be required to purchase any shares of our common stockif such sale would result in Lincoln Park’s beneficial ownership of our common stock exceeding the Beneficial Ownership Cap of 4.99%of the outstanding shares of our common stock. Our inability to access a portion or the full amount available under the Purchase Agreement,in the absence of any other financing sources, could have a material adverse effect on our business.

The extent we rely on Lincoln Park as asource of funding will depend on a number of factors including the prevailing market price of our common stock and the extent towhich we are able to secure working capital from other sources. Assuming a purchase price of $0.263 per share (which represents theclosing price of our common stock on September 8, 2023), the purchase by Lincoln Park of the entire 5,000,000 Purchase Sharesissuable under the Purchase Agreement being registered for resale by Lincoln Park hereunder would result in gross proceeds to us ofonly $1,315,000. If obtaining sufficient funding from Lincoln Park were to prove unavailable or prohibitively dilutive, wewill need to secure another source of funding in order to satisfy our working capital needs. Even if we sell all $10.0 million ofshares of our common stock to Lincoln Park under the Purchase Agreement, we may still need additional capital to finance our futurecommercialization plans and working capital needs, and we may have to raise funds through the issuance of equity or debtsecurities.

Depending on the type and the terms of any financingwe pursue, stockholders’ rights and the value of their investment in our common stock could be reduced. A financing could involveone or more types of securities including common stock, convertible debt or warrants to acquire common stock. These securities could beissued at or below the then prevailing market price for our common stock. In addition, if we issue secured debt securities, the holdersof the debt would have a claim to our assets that would be prior to the rights of stockholders until the debt is paid. Interest on thesedebt securities would increase costs and negatively impact operating results. If the issuance of new securities results in diminishedrights to holders of our common stock, the market price of our common stock could be negatively impacted.

Should the financing we require to sustain ourworking capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effecton our business, operating results, financial condition and prospects.

Our management will have broad discretionover the use of the net proceeds from our sale of shares of common stock to Lincoln Park, and you may not agree with how we use the proceedsand the proceeds may not be invested successfully.

Our management will have broad discretion as tothe use of the net proceeds from our sale of shares of common stock to Lincoln Park, and we could use them for purposes other than thosecontemplated at the time of commencement of this offering. Accordingly, you will be relying on the judgment of our management with regardto the use of those net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceedsare being used appropriately. It is possible that, pending their use, we may invest those net proceeds in a way that does not yield afavorable, or any, return for us. The failure of our management to use such funds effectively could have a material adverse effect onour business, financial condition, operating results and cash flows.

We could lose our listing on The NasdaqCapital Market if the closing bid price of our common stock does not return to above $1.00 for ten consecutive days during the 180 daysending January 16, 2024. The loss of the Nasdaq listing would make our common stock significantly less liquid and would affect its value. 

As initially disclosed on the Current Report onForm 8-K filed on July 21, 2023 with the SEC, we received written notification from Nasdaq notifying us that we had failed to comply withNasdaq Listing Rule 5550(a)(2) because the bid price for our common stock for 30 consecutive business days prior to such date had closedbelow the minimum $1.00 per share requirement for continued listing. Nasdaq initially granted us 180 calendar days, or until January 16,2024, to regain compliance with the Minimum Bid Price Requirement.

The notice had no immediate effect on the listingor trading of the common stock on The Nasdaq Capital Market. If, at any time before January 16, 2024, the bid price of our common stockcloses at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written notification that we haveachieved compliance with the Minimum Bid Price Requirement. If compliance with the Minimum Bid Price Requirement cannot be demonstratedby January 16, 2024, we may be eligible for an additional 180 calendar days to comply with Nasdaq Listing Rule 5550(a)(2), subject tous satisfying the continued listing requirement for the market value of publicly held shares and all other initial listing standards forThe Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, subject to Nasdaq’s approval.

Upon delisting from The Nasdaq Capital Market,our stock would be traded over-the-counter in the inter-dealer quotation system, more commonly known as the OTC. OTC transactions involverisks in addition to those associated with transactions in securities traded on the securities exchanges, such as The Nasdaq Capital Market(together, “Exchange-listed Stocks”). Many OTC stocks trade less frequently and in smaller volumes than Exchange-listed Stocks.Accordingly, our stock would be less liquid than it would be otherwise. Also, the values of OTC stocks are often more volatile than Exchange-listedStocks. Additionally, institutional investors are usually prohibited from investing in OTC stocks, and it might be more challenging toraise capital when needed. 

We will continue to monitor the closing bid priceof our common stock and seek to regain compliance with the Minimum Bid Price Requirement within the allotted compliance period; however,there can be no assurance that we will regain compliance with the Minimum Bid Requirement.

Future sales and issuances of our securitiescould result in additional dilution of the percentage ownership of our stockholders and could cause our share price to fall.

We expect that significant additional capitalwill be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities,our shareholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in oneor more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or otherequity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result inmaterial dilution to our existing shareholders, and new investors could gain rights superior to our existing shareholders.

If securities or industry analysts do notpublish 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 dependin part on the research and reports that securities or industry analysts publish about us or our business. If too few securities or industryanalysts provide coverage or if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable researchabout our business, the price of our stock would likely decline. If one or more of these analysts cease coverage of us or fail to publishreports on us regularly, demand for our stock could decrease, which might cause the price of our stock and trading volume to decline.

The price of our common stock may be volatile,and you may be unable to resell your shares at or above the offering price.

The trading price of our commonstock following this offering may fluctuate substantially. Following the closing of this public offering, the market price of our commonstock may be higher or lower than the price you pay in the offering, depending on many factors, some of which are beyond our control andmay not be related to our operating performance. These fluctuations could cause you to lose all or part of your investment in our commonstock. Factors that could cause fluctuations in the trading price of our common stock include the following:

In addition, if the market for medical deviceor healthcare stocks or the stock market, in general, experience a loss of investor confidence, the trading price of our common stockcould decline for reasons unrelated to our business, results of operations, or financial condition. The trading price of our common stockmight also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. Inthe past, following periods of volatility in the market price of a company’s securities, securities class action litigation hasoften been brought against that company. If our stock price is volatile, we may become the target of securities litigation. Securitieslitigation could result in substantial costs and divert our management’s attention and resources from our business. This could havea material adverse effect on our business, results of operations, and financial condition.

Our failure to maintain effective internal controls over financialreporting could have an adverse impact on us.

We are required to establish and maintain appropriateinternal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, couldadversely impact our public disclosures regarding our business, financial condition, or results of operations. In addition, management’sassessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internalcontrols over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditionsthat need to be addressed in our internal control over financial reporting, disclosure of management’s assessment of our internalcontrols over financial reporting or disclosure of our public accounting firm’s attestation to or report on management’s assessmentof 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 conceivedand operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, thedesign of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be relative totheir costs. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that allcontrol issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realitiesthat judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Further, controls canbe circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. Thedesign of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can beno assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control maybecome inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because ofinherent 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 a materialweakness due to lack of segregation of duties. The lack of segregation of duties existed as a result of the Company having no employeesuntil June 2021. Management has taken initial steps to remedy this weakness by hiring a Chief Financial Officer, a director of SEC reportingand compliance, a senior accountant, a cost accountant and external financial consultants, and plans to continue to add additional resources,technology and headcount as warranted by the growth of the Company. Management has taken initial steps to remedy this weakness by hiringa Chief Financial Officer as well as a Chief Executive Officer, and we are in the process of putting proper policies and procedures inplace to ensure proper documentation is established and maintained for transactions that the Company enters into. While we believe theseefforts will improve our internal controls and address the underlying causes of the material weakness, such material weakness will notbe remediated until our remediation plan has been fully implemented and we have concluded that our controls are operating effectivelyfor a sufficient period of time. We cannot be certain that the steps we are taking will be sufficient to remediate the control deficienciesthat led to our material weakness in our internal control over financial reporting or prevent future material weaknesses or control deficienciesfrom occurring. While we are working to remediate the material weakness as timely and efficiently as possible, at this time we cannotprovide an estimate of costs expected to be incurred in connection with the implementation of this remediation plan, nor can we providean 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 maynot be sufficient to ensure timely and reliable reporting of financial information, which, as a public company, could materially harmour stock price.

We will require significant financial resourcesto maintain our public reporting status. We cannot assure you we will be able to maintain adequate resources to ensure that we will nothave any future material weakness in our system of internal controls. The effectiveness of our controls and procedures may in the futurebe limited by a variety of factors including:

Our internal control over financial reportingwill be a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles in the United States of America. Our internalcontrol over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management anddirectors 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.

Despite these anticipated controls, because ofits inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systemsdetermined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reportingcompanies like us face additional limitations. Smaller reporting companies employ fewer individuals and can find it difficult to employresources for complicated transactions and effective risk management. Additionally, smaller reporting companies tend to utilize generalaccounting software packages that lack a rigorous set of software controls.

If we fail to have effective controls and proceduresfor financial reporting in place, we could be unable to provide timely and accurate financial information and be subject to investigationby the SEC and civil or criminal sanctions.

We must implement additional and expensiveprocedures and controls in order to grow our business and organization and to satisfy reporting requirements, which will increase ourcosts and require additional management resources.

As a public company, we are required to complywith the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the related rules and regulations of the SEC, includingthe requirements that we maintain disclosure controls and procedures and adequate internal control over financial reporting. Compliancewith the Sarbanes-Oxley Act and other SEC and national exchange requirements will increase our costs and require additional managementresources. We have begun the process of upgrading our procedures and controls and will need to begin implementing additional proceduresand controls as we grow our business and organization and to satisfy new reporting requirements. If we are unable to complete the requiredassessment as to the adequacy of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act orif we fail to establish and maintain internal control over financial reporting, our ability to produce timely, accurate and reliable periodicfinancial statements could be impaired.

If we do not establish and maintain adequate internalcontrol 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 accuracyof our public reporting could cause our stock price to decline.

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 classaction litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantialcosts and divert our management’s attention from other business concerns.

We may not be able to satisfy listing requirementsof Nasdaq to maintain a listing of our common stock.

We must meet certain financial and liquidity criteriato maintain the listing of our common stock on Nasdaq. If we violate the maintenance requirements for continued listing of our commonstock, our common stock may be delisted. As described under “Prospectus Summary-Recent Developments,” we received theNotice from Nasdaq, notifying us that we are no longer in compliance with the $2.5 million minimum stockholders’ equity requirementfor continued listing on The Nasdaq Capital Market and in addition, the Company does not currently meet the alternative compliance standardsrelating to the market value of listed securities or net income from continuing operations. The Company is presently evaluating variouscourses of action to regain compliance and intends to timely submit a plan to Nasdaq to regain compliance. However, there can be no assurancethat the Company’s plan will be accepted by Nasdaq or that if it is, the Company will be able to regain compliance and maintainits listing on The Nasdaq Capital Market. In addition, our Board may determine that the cost of maintaining our listing on a nationalsecurities 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 marketfor, our common stock. In addition, the delisting of our common stock could significantly impair our ability to raise capital.

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 willmake 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 exemptionsfrom 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-OxleyAct, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions fromthe requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute paymentsnot 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 andour stock price may be more volatile.

In addition, Section 107 of the JOBS Act alsoprovides 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 otherwiseapply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accountingstandards.

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 aneffective registration statement under the Securities Act, although we will lose that status sooner if our revenues exceed $1.235 billion,if we issue more than $1 billion in non-convertible debt in a three year period, or we are deemed to be a large accelerated filer underapplicable SEC rules.

Our status as an “emerging growthcompany” under the JOBS Act may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reportingrequirements provided to us as an “emerging growth company” and because we will have an extended transition period for complyingwith new or revised financial accounting standards, we may be less attractive to investors, and it may be difficult for us to raise additionalcapital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe thatour financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as andwhen we need it, our financial condition and results of operations may be materially and adversely affected.

We have not paid dividends in the past anddo 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 commonstock and do not anticipate paying cash dividends on our common stock in the foreseeable future. We currently intend to retain any futureearnings to support the development of our business and do not anticipate paying cash dividends in the foreseeable future. Our paymentof any future dividends will be at the discretion of our Board 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 toat the time. In addition, our ability to pay dividends on our common stock may be limited by Delaware state law. Accordingly, investorsmust rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on theirinvestment. Investors seeking cash dividends should not purchase our common stock.

The elimination of personal liability againstour directors and officers under Delaware law and the existence of indemnification rights held by our directors, officers and employeesmay result in substantial expenses.

Our amended and restated certificate of incorporation,as amended (“Certificate of Incorporation”), and our bylaws (“Bylaws”) eliminate the personal liability of ourdirectors and officers to us and our stockholders for damages for breach of fiduciary duty as a director or officer to the extent permissibleunder Delaware law. Further, our Certificate of Incorporation allows for us to and our Bylaws provide that we are obligated to indemnifyeach of our directors or officers to the fullest extent authorized by Delaware law and, subject to certain conditions, advance the expensesincurred by any director or officer in defending any action, suit or proceeding prior to its final disposition. Those indemnificationobligations 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 alawsuit against any of our current or former directors or officers for breaches of their fiduciary duties, even if such actions mightotherwise benefit our stockholders.

Our Certificate of Incorporation will designatethe 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 Certificate of Incorporation 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 soleand exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim ofbreach 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, our Certificate of Incorporationor Bylaws, or (d) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chanceryhaving personal jurisdiction over the indispensable parties named as defendants therein. However, prior to the effectiveness of the registrationstatement related to this prospectus, we will amend our Certificate of Incorporation to include a statement that this exclusive forumprovision does not apply to claims arising under federal securities laws. Any person or entity purchasing or otherwise acquiring any interestin shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our Certificate of Incorporationas described above.

This choice of forum provision may limit a stockholder’sability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employeesor stockholders, which may discourage lawsuits with respect to such claims. As such, stockholders of the Company seeking to bring a claimregarding the internal affairs of the Company may be subject to increased costs associated with litigating in Delaware as opposed to theirhome state or other forum, precluded from bringing such a claim in a forum they otherwise consider to be more favorable, and discouragedfrom bringing such claims as a result of the foregoing or other factors related to forum selection. Alternatively, if a court were tofind the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, wemay incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating resultsand financial condition.

We believe these provisions benefit us by providingincreased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporate disputes, efficientadministration 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 limitany stockholder’s ability to bring a claim in a judicial forum that such stockholder finds favorable for disputes with us or ourdirectors, officers, employees or agents. The enforceability of similar choice of forum provisions in other companies’ certificatesof incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought againstus, a court could find the choice of forum provisions contained in our Certificate of Incorporation to be inapplicable or unenforceablein such action. If a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicableor unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which couldadversely affect our business, financial condition or results of operations.

IN ADDITION TO THE ABOVE RISKS, BUSINESSESARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS FILING, POTENTIAL INVESTORS SHOULD KEEPIN MIND THAT OTHER POSSIBLE RISKS MAY ADVERSELY IMPACT THE COMPANY’S BUSINESS OPERATIONS AND THE VALUE OF THE COMPANY’S SECURITIES.

SPECIALNOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains “forward-lookingstatements.” Forward-looking statements reflect the current view about future events. When used in this prospectus, the words “anticipate,”“believe,” “estimate,” “expect,” “future,” “intend,” “plan” orthe negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Suchstatements, include, but are not limited to, statements contained in this prospectus relating to our business strategy, our future operatingresults and liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptionsregarding our business, the economy and other future conditions. Because forward–looking statements relate to the future, they aresubject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materiallyfrom those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assuranceof future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that couldcause actual results to differ materially from those in the forward-looking statements include, without limitation:

Should one or more of these risks or uncertaintiesmaterialize, 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 actualresults 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.

USEOF PROCEEDS

This prospectus relates to shares of our commonstock that may be offered and sold from time to time by Lincoln Park. We will receive no proceeds from the sale of shares of common stockby Lincoln Park in this offering. We may receive up to $10 million in gross proceeds under the Purchase Agreement from any sales we maketo Lincoln Park pursuant to the Purchase Agreement after the date of this prospectus.

Any net proceeds from the sale of our common stockto Lincoln Park that we receive under the Purchase Agreement are expected to be used for general corporate purposes, including workingcapital. As we are unable to predict the timing or amount of potential issuances of all of the additional shares issuable to the PurchaseAgreement, we cannot specify with certainty all of the particular uses for the net proceeds that we will have from the sale of such shares.Accordingly, our management will have broad discretion in the application of the net proceeds. We may use the proceeds for purposes thatare not contemplated at the time of this offering. It is possible that no additional shares will be issued under the Purchase Agreement.

DIVIDEND POLICY

We have not declared any cash dividends sinceinception and we do not anticipate paying any dividends in the foreseeable future. Instead, we anticipate that all of our earnings willbe used to provide working capital, to support our operations, and to finance the growth and development of our business, including potentiallythe acquisition of, or investment in, businesses, technologies or products that complement our existing business. The payment of dividendsis within the discretion of the Board and will depend on our earnings, capital requirements, financial condition, prospects, applicableDelaware law, which provides that dividends are only payable out of surplus or current net profits, and other factors our Board mightdeem relevant. There are no restrictions that currently limit our ability to pay dividends on our common stock other than those generallyimposed by applicable state law.

MARKETFOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock and tradeable warrants arelisted on The Nasdaq Capital Market under the symbols “TNON” and “TNONW,” respectively. As of September 11,2023, we have issued and outstanding 22,612,856 shares of common stock issued and outstanding held by 72 stockholders of record.

We also have outstanding:

Securities Authorized for Issuance under Equity Incentive Plan

On October 1, 2012, the Board adopted the 2012Plan. The 2012 Plan terminated in April 2022. There are 727,394 options issued and outstanding under the 2012 Plan that have not beenexercised. These options are administered under the 2022 Plan.

In January and February 2022, our Board and ourshareholders approved our 2022 Equity Incentive Plan (the “2022 Plan,” together with the 2012 Plan, the “Plans”).The 2022 Plan governs equity awards to our employees, directors, officers, consultants and other eligible participants. Initially, themaximum number of shares of our common stock that may be subject to awards under the 2022 Plan is equal to (i) 1,600,000 plus (ii) thelesser of (a) 750,000 shares of our common stock and (b) the number of shares of our common stock subject to awards granted under the2012 Plan that after the 2012 Plan is terminated are cancelled, expired or otherwise terminated without having been exercised in full,are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations, or are forfeited to orrepurchased by the Company due to failure to vest. The maximum number of shares that are subject to awards under the 2022 Plan is subjectto an annual increase equal to the lesser of (i) 1,100,000 shares of our common stock, (ii) a number of shares of our common stock equalto 4% of the prior year’s maximum number and (iii) such number of shares of our common stock as determined by the 2022 Plan administrator.For a more detailed description of the 2022 Plan see “Description of Securities—2022 Equity Incentive Plan.”

The types of awards permitted under the Plansinclude nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performanceshares, performance units and other awards. Each option shall be exercisable at such times and subject to such terms and conditions asthe Board may specify.

The Board has the power to amend, suspend or terminatethe Plans without stockholder approval or ratification at any time or from time to time. No change may be made that increases the totalnumber of shares of our common stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for optionsor exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year.

DILUTION

The sale of common stock to Lincoln Park pursuantto the Purchase Agreement will have a dilutive impact on our stockholders. In addition, the lower the price of our common stock is atthe time we exercise our right to issue and sell shares to Lincoln Park, the more shares of our common stock we will issue to raise ourdesired amount of proceeds from the sale, and the greater the dilution to our existing stockholders.

The price that Lincoln Park will receive for ourcommon stock when resold pursuant to this prospectus will depend upon the timing of sales and will fluctuate based on the trading priceof our common stock.

We calculate net tangible book value per share by dividing our net tangible book value, which is tangible assets less total liabilities, by the number of outstandingshares of our common stock. Dilution represents the difference between the portion of the amount per share paid by purchasers of sharesin this offering and the as adjusted net tangible book value per share of our common stock immediately after giving effect tothis offering. As of June 30, 2023, we had a net tangible book value (deficit) of$903,000, or $0.04 per share of common stock.

After giving effect to (i) the sale of 5,000,000shares of common stock to Lincoln Park for which we will receive cash proceeds pursuant to the Purchase Agreement at an assumed priceof $0.263 per share, the closing price of our common stock on Nasdaq on September 8, 2023 and (ii) deducting estimated offering expensesof approximately $161,000 payable by us, and without giving effect to the Exchange Cap or Beneficial Ownership Cap under the PurchaseAgreement, our as adjusted net tangible book value as of June 30, 2023, would have been approximately $2.1 million, or $0.077 per share.This represents an immediate increase in net tangible book value of $0.035 per share to existing stockholders and an immediate dilutionof $0.186 per share to new investors.

The following table illustrates this dilution on a per share basis:

The number of shares of our common stock outstanding referenced aboveis based on 24,027,891 shares of common stock outstanding as of June 30, 2023, and excludes and excludes as of such date: (i) 1,905,906shares of our common stock issuable pursuant to options and RSUs granted pursuant to our equity incentive plan; and (ii) 96,000 sharesour common stock issuable upon the exercise of the warrants issued to our underwriters in our initial public offering and (iii) warrantsto purchase up to 20,000,000 shares of our common stock at an exercise price equal to $0.3146 per share issued to investors in the June2023 Public Offering.

THELINCOLN PARK TRANSACTION

General

On July 24, 2023, we entered into the PurchaseAgreement with Lincoln Park pursuant to which Lincoln Park has agreed to purchase from us up to an aggregate of $10.0 million of our commonstock (subject to certain limitations) from time to time over the term of the Purchase Agreement.

Also on July 24, 2023, we entered into the RegistrationRights Agreement, pursuant to which we filed with the SEC the registration statement of which this prospectus forms a part to registerunder the Securities Act for resale by Lincoln Park up to 5,989,087 shares of common stock, consisting of (i) the 989,087 Commitment Sharesthat we previously issued to Lincoln Park on July 24, 2023 as consideration for its commitment to purchase shares of our common stockat our direction from time to time after the Commencement Date under the Purchase Agreement and (ii) up to 5,000,000 Purchase Shares thatwe may elect to sell to Lincoln Park, in our sole discretion, from time to time from and after the Commencement Date under the PurchaseAgreement.

We do not have the right to commence any salesof share of our common stock to Lincoln Park under the Purchase Agreement until the Commencement on the Commencement Date, when all ofthe conditions set forth in the Purchase Agreement are initially satisfied, including that the SEC has declared effective the registrationstatement that includes this prospectus registering the shares of our common stock that have been and may be issued and sold to LincolnPark under the Purchase Agreement. Beginning on the Commencement Date and for a period of 24 months thereafter, under the terms and subjectto the conditions of the Purchase Agreement, from time to time, at the Company’s discretion, the Company has the right, but notthe obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to $10 million of shares of common stock, subjectto certain limitations set forth in the Purchase Agreement. Specifically, from time to time from and after the Commencement Date, theCompany may, at its discretion, direct Lincoln Park to purchase on any single business day on which the closing price of its common stockon Nasdaq is equal to or greater than $0.15 up to 100,000 shares of common stock in a Regular Purchase, which share limit may be increasedto up to 150,000 shares of common stock, depending on the closing sale price of our common stock on Nasdaq on the applicable purchasedate for such Regular Purchase. In no case, however, will Lincoln Park’s commitment with respect to any single Regular Purchaseexceed $500,000; provided, that the parties may mutually agree at any time to increase the maximum number of shares of common stock theCompany may direct Lincoln Park to purchase in any single Regular Purchase to up to 1,000,000 shares or any number of shares that shallnot exceed 4.99% of the then outstanding shares of common stock. We will control the timing and amount of any sales of our common stockto Lincoln Park. The purchase price per share for each such Regular Purchase will be based on prevailing market prices of the Company’scommon stock immediately preceding the time of sale, as determined under the Purchase Agreement.

If the Company directs Lincoln Park to purchasethe maximum number of shares of common stock that the Company may sell in a Regular Purchase, then in addition to such Regular Purchase,and subject to certain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park to purchase additionalshares of common stock in an Accelerated Purchase and an Additional Accelerated Purchase (including multiple Additional Accelerated Purchaseson the same trading day) as provided in the Purchase Agreement. The purchase price per share for each Accelerated Purchase and AdditionalAccelerated Purchase will be based on market prices of the common stock on the applicable purchase date for such Accelerated Purchasesand such Additional Accelerated Purchases. Lincoln Park has no right to require the Company to sell any common stock to Lincoln Park,but Lincoln Park is obligated to make purchases as the Company directs, subject to conditions and limitations set forth in the PurchaseAgreement.

Under applicable Nasdaq rules, in no event maywe issue or sell to Lincoln Park under the Purchase Agreement shares of our common stock in excess of the Exchange Cap of 4,322,591 shares(including the Commitment Shares), which represents 19.99% of the shares of our common stock outstanding immediately prior to the executionof the Purchase Agreement, unless (i) we obtain stockholder approval to issue shares of our common stock in excess of the Exchange Capor (ii) the average price of all applicable sales of our common stock to Lincoln Park under the Purchase Agreement equals or exceeds $0.3051per share (which represents the lower of (A) the official closing price of our common stock on Nasdaq on the trading day immediately precedingthe date of the Purchase Agreement and (B) the average official closing price of our common stock on Nasdaq for the five consecutive tradingdays ending on the trading day immediately preceding the date of the Purchase Agreement, adjusted such that the transactions contemplatedby the Purchase Agreement are exempt from the Exchange Cap limitation under applicable Nasdaq rules. In any event, the Purchase Agreementspecifically provides that we may not issue or sell any shares of our common stock under the Purchase Agreement if such issuance or salewould breach any applicable Nasdaq rules or regulations.

The Purchase Agreement also prohibits us from directing Lincoln Parkto purchase any shares of our common stock if those shares of our common stock, when aggregated with all other shares of our common stockthen beneficially owned by Lincoln Park and its affiliates, would result in Lincoln Park having beneficial ownership of more than theBeneficial Ownership Cap of 4.99% of the outstanding shares of our common stock.

We will control the timing and amount of any salesof our common stock to Lincoln Park. We may at any time in our sole discretion terminate the Purchase Agreement without fee, penalty orcost upon one business day notice. There are no restrictions on future financings, rights of first refusal, participation rights, penaltiesor liquidated damages in the Purchase Agreement or Registration Rights Agreement, other than restrictions on entering into committed equityfinancing facility transactions or transactions that are similar thereto with third parties as set forth in the Purchase Agreement. LincolnPark may not assign or transfer its rights and obligations under the Purchase Agreement.

As consideration for Lincoln Park’s commitmentto purchase shares of common stock from us at our direction from time to time from and after the Commencement Date pursuant to the PurchaseAgreement, promptly following our execution of the Purchase Agreement and the Registration Rights Agreement, we issued 989,087 CommitmentShares to Lincoln Park on July 24, 2023. All 989,087 Commitment Shares that we issued to Lincoln Park are included in the 5,989,087 sharesof common stock being registered under the Securities Act for resale by Lincoln Park under the registration statement of which this prospectusforms a part.

As of September 11, 2023, there were 22,612,856 shares of our common stockoutstanding, of which 15,196,538 shares of our common stock were held by non-affiliates, including the 989,087 Commitment Shares that weissued to Lincoln Park upon execution of the Purchase Agreement. Although the Purchase Agreement provides that we may sell up to an aggregateof $10.0 million of our common stock to Lincoln Park, only 5,989,087 shares of our common stock are being registered for resale underthis prospectus, which represents the 989,087 Commitment Shares that we issued to Lincoln Park upon execution of the Purchase Agreementand an additional 5,000,000 shares of our common stock that we may issue and sell to Lincoln Park as Purchase Shares in the future underthe Purchase Agreement, if and when we sell shares of our common stock to Lincoln Park under the Purchase Agreement. If all of the 5,000,000Purchase Shares that may be sold to Lincoln Park in the future under the Purchase Agreement that are being registered for resale hereunderwere issued and outstanding as of the date of this prospectus, such shares of our common stock, together with the 989,087 Commitment Sharesthat we issued to Lincoln Park upon execution of the Purchase Agreement that are outstanding as of the date of this prospectus, wouldrepresent approximately 26.5% of the total number of shares of our common stock outstanding and approximately 39.4% of the totalnumber of outstanding shares of our common stock held by non-affiliates, in each case as of the date of this prospectus.

Purchase of Shares Under the Purchase Agreement

Regular Purchases

Under the terms and subject to satisfaction ofthe conditions in the Purchase Agreement, beginning on the Commencement Date and from time to time for a period of up to 24 months thereafter,the Company may, at its discretion, direct Lincoln Park to purchase on any single business day on which the closing price of our commonstock on Nasdaq is equal to or greater than $0.15 up to 100,000 shares of common stock in a Regular Purchase; provided, that the Companymay direct Lincoln Park to purchase in a Regular Purchase (i) up to 125,000 shares of common stock, if the closing sale price of our commonstock on Nasdaq on such business day is at least $1.50 per share and (ii) up to 150,000 shares of common stock, if the closing sale priceof our common stock on Nasdaq on such business day is at least $2.50 per share (each share amount limitation applicable to a Regular Purchase,the “Regular Purchase Share Limit”). The foregoing share amounts and per share prices used to determine the applicable RegularPurchase Share Limit are subject to proportionate adjustment in the event of a reorganization, recapitalization, non-cash dividend, stocksplit or other similar transaction; provided, that if after giving effect to such full proportionate adjustment, the adjusted RegularPurchase Share Limit would preclude us from requiring Lincoln Park to purchase shares of our common stock at an aggregate purchase priceequal to or greater than $100,000 in any single Regular Purchase, then the Regular Purchase Share Limit will not be fully adjusted, butrather the Regular Purchase Share Limit for such Regular Purchase shall be adjusted as specified in the Purchase Agreement, such that,after giving effect to such adjustment, the Regular Purchase Share Limit will be equal to (or as close as can be derived from such adjustmentwithout exceeding) $100,000.

In no case, however, will Lincoln Park’scommitment with respect to any single Regular Purchase exceed $500,000; provided, that we and Lincoln Park may mutually agree at any timeto increase the maximum number of shares of common stock the Company may direct Lincoln Park to purchase in any single Regular Purchaseto up to 1,000,000 shares or any number of shares that shall not exceed 4.99% of the then outstanding shares of common stock.

The purchase price per share for each such RegularPurchase will be equal to the lower of:

Accelerated Purchases

In addition to Regular Purchases described above,we may also direct Lincoln Park, on any business day on which we have properly submitted a Regular Purchase notice directing Lincoln Parkto purchase the maximum number of shares of our common stock that we are then permitted to include in a single Regular Purchase notice,to purchase on the next following business day an additional amount of our common stock (each, an “Accelerated Purchase”),not to exceed the lesser of:

Notwithstanding the foregoing, we and Lincoln Park may mutually agreeat any time to increase the maximum number of shares of our common stock the Company may direct Lincoln Park to purchase in any singleAccelerated Purchase to up to 1,000,000 shares or any number of shares that shall not exceed 4.99% of the then outstanding shares of commonstock.

The purchase price per share for each such AcceleratedPurchase will be equal to 95% of the lower of:

Additional Accelerated Purchases

We may also direct Lincoln Park, not later than1:00 p.m., Eastern time, on a business day on which an Accelerated Purchase has been completed and all of the shares to be purchased thereunder(and under the corresponding Regular Purchase) have been properly delivered to Lincoln Park in accordance with the Purchase Agreementprior to such time on such business day, to purchase an additional amount of our common stock on the same business day (each, an “AdditionalAccelerated Purchase), of up to the lesser of:

Notwithstanding the foregoing, we and Lincoln Park may mutually agreeat any time to increase the maximum number of shares of our common stock the Company may direct Lincoln Park to purchase in any singleAdditional Accelerated Purchase to up to 1,000,000 shares or any number of shares that shall not exceed 4.99% of the then outstandingshares of common stock.

We may, in our sole discretion, submit multipleAdditional Accelerated Purchase notices to Lincoln Park prior to 1:00 p.m., Eastern time, on a single Accelerated Purchase date, providedthat all prior Accelerated Purchases and Additional Accelerated Purchases (including those that have occurred earlier on the same day)have been completed and all of the shares to be purchased thereunder (and under the corresponding Regular Purchase) have been properlydelivered to Lincoln Park in accordance with the Purchase Agreement.

The purchase price per share for each such AdditionalAccelerated Purchase will be equal to 95% of the lower of:

In the case of Accelerated Purchases and AdditionalAccelerated Purchases, the purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend,stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price.

Other than as described above, there are no tradingvolume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our commonstock to Lincoln Park.

Suspension Events

Suspension events under the Purchase Agreementinclude the following:

Lincoln Park does not have the right to terminatethe Purchase Agreement upon any of the suspension events set forth above. During a suspension event, all of which are outside of LincolnPark’s control, we may not direct Lincoln Park to purchase any shares of our common stock under the Purchase Agreement.

Our Termination Rights

We have the unconditional right, at any time,for any reason and without any payment or liability to us, to give notice to Lincoln Park to terminate the Purchase Agreement. In theevent of bankruptcy proceedings by or against us, the Purchase Agreement will automatically terminate without action of any party.

No Short-Selling or Hedging by Lincoln Park

Lincoln Park has agreed that neither it nor anyof its affiliates shall engage in any direct or indirect short-selling or hedging of our common stock during any time prior to the terminationof the Purchase Agreement.

Prohibitions on Transactions

There are no restrictions on future financings,rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration Rights Agreementother than a prohibition on our entering into other committed equity financing facility transactions or transactions that are similarthereto.

Effect of Performance of the Purchase Agreementon Our Stockholders

All 5,989,087 shares of our common stock beingregistered for resale by Lincoln Park under the registration statement that includes this prospectus which have been or may be issuedor sold by us to Lincoln Park under the Purchase Agreement are expected to be freely tradable. It is anticipated that shares registeredin this offering will be sold over a period of up to 24 months commencing on the Commencement Date.

The sale by Lincoln Park of a significant amountof shares registered in this offering at any given time could cause the market price of our common stock to decline and to be highly volatile.Sales of our common stock to Lincoln Park, if any, will depend upon market conditions and other factors to be determined by us. We mayultimately decide to sell to Lincoln Park all, some or none of the additional shares of our common stock that may be available for usto sell pursuant to the Purchase Agreement. If and when we do sell shares to Lincoln Park, after Lincoln Park has acquired the shares,Lincoln Park may resell all, some or none of those shares at any time or from time to time in its discretion. Therefore, sales to LincolnPark by us under the Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock. In addition,if we sell a substantial number of shares to Lincoln Park under the Purchase Agreement, or if investors expect that we will do so, theactual sales of shares or the mere existence of our arrangement with Lincoln Park may make it more difficult for us to sell equity orequity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales. However, we have theright to control the timing and amount of any additional sales of our shares to Lincoln Park and the Purchase Agreement may be terminatedby us at any time at our discretion without any cost to us.

If and when we do elect to sell shares of ourcommon stock to Lincoln Park pursuant to the Purchase Agreement, after Lincoln Park has acquired such shares, Lincoln Park may resellall, some or none of such shares at any time or from time to time in its discretion and at different prices. As a result, investors whopurchase shares from Lincoln Park in this offering at different times will likely pay different prices for those shares, and so may experiencedifferent levels of dilution and in some cases substantial dilution and different outcomes in their investment results. Investors mayexperience a decline in the value of the shares they purchase from Lincoln Park in this offering as a result of future sales made by usto Lincoln Park at prices lower than the prices such investors paid for their shares in this offering.

Pursuant to the Purchase Agreement, we will havediscretion, subject to market demand, to vary the timing, prices, and numbers of shares sold to Lincoln Park. Sales of our common stock,if any, to Lincoln Park under the Purchase Agreement will depend upon market conditions and other factors to be determined by us. We mayultimately decide to sell to Lincoln Park all, some or none of the shares of our common stock that may be available for us to sell toLincoln Park pursuant to the Purchase Agreement. Because the purchase price per share to be paid by Lincoln Park for the shares of commonstock that we may elect to sell to Lincoln Park under the Purchase Agreement, if any, will fluctuate based on the market prices of ourcommon stock at the time we elect to sell shares to Lincoln Park pursuant to the Purchase Agreement, if any, it is not possible for usto predict, as of the date of this prospectus and prior to any such sales, the number of shares of common stock that we will sell to LincolnPark under the Purchase Agreement, the purchase price per share that Lincoln Park will pay for shares purchased from us under the PurchaseAgreement, or the aggregate gross proceeds that we will receive from those purchases by Lincoln Park under the Purchase Agreement.

Moreover, although the Purchase Agreement providesthat we may, in our discretion, from time to time after the date of this prospectus and during the term of the Purchase Agreement, directLincoln Park to purchase shares of our common stock from us in one or more purchases under the Purchase Agreement, for a maximum aggregatepurchase price of up to $10.0 million, only 5,989,087 shares of common stock (989,087 which represent the Commitment Shares that havebeen issued by us to Lincoln Park on July 24, 2023, for which we will receive no cash proceeds) are being registered for resale underthe registration statement of which this prospectus forms a part. Therefore, only 5,000,000 of such shares of common stock represent sharesthat we may issue and sell to Lincoln Park for cash consideration in purchases under the Purchase Agreement from time to time, at oursole discretion, during the 24-month period commencing on the Commencement Date. If after the Commencement Date we elect to sell to theselling stockholder all of the 5,000,000 shares of common stock being registered for resale under this prospectus that are available forsale by us to the selling stockholder in purchases under the Purchase Agreement, depending on the market prices of our common stock atthe time of such sales, the actual gross proceeds from the sale of all such shares may be substantially less than the $10.0 million totalpurchase commitment available to us under the Purchase Agreement, which could materially adversely affect our liquidity.

Additionally, under applicable Nasdaq rules, forso long as the Exchange Cap of 4,322,591 shares (representing 19.99% of the shares of our common stock outstanding immediately prior tothe execution of the Purchase Agreement) continues to apply to issuances and sales of common stock under the Purchase Agreement, in noevent may we issue more than a maximum of 4,322,591 shares (which includes the 989,087 Commitment Shares we already issued) of our commonstock to Lincoln Park under the Purchase Agreement, meaning that we would only be able to sell up to a maximum of 3,333,504 shares ofcommon stock as Purchase Shares under the Purchase Agreement (rather than the 5,000,000 Purchase Shares included in this prospectus) withoutexceeding the Exchange Cap. If it becomes necessary for us to issue and sell to Lincoln Park shares of common stock in excess of the ExchangeCap under the Purchase Agreement in order to receive aggregate gross proceeds equal to $10.0 million under the Purchase Agreement, thenfor so long as the Exchange Cap continues to apply to issuances and sales of common stock under the Purchase Agreement, we must firstobtain stockholder approval to issue shares of common stock in excess of the Exchange Cap in accordance with applicable Nasdaq listingrules. Furthermore, if we elect to issue and sell to Lincoln Park more than the 5,000,000 shares of our common stock that we may electto issue and sell to Lincoln Park under the Purchase Agreement that are being registered for resale by Lincoln Park hereunder, which wehave the right, but not the obligation, to do, we must first file with the SEC one or more additional registration statements to registerunder the Securities Act for resale by Lincoln Park such additional shares of our common stock we wish to sell from time to time underthe Purchase Agreement, which the SEC must declare effective, in each case before we may elect to sell any additional shares of our commonstock to Lincoln Park under the Purchase Agreement. Any issuance and sale by us under the Purchase Agreement of a substantial amount ofshares of common stock in addition to the 5,000,000 shares of common stock that we may elect to issue and sell to Lincoln Park under thePurchase Agreement that are being registered for resale by Lincoln Park hereunder could cause additional substantial dilution to our stockholders.

The number of shares of common stock ultimatelyresold by Lincoln Park through this prospectus is dependent upon the total number of shares of common stock, if any, we elect to issueand sell to Lincoln Park under the Purchase Agreement from and after Commencement and during the term of the Purchase Agreement. Issuancesof our common stock to Lincoln Park under the Purchase Agreement will not affect the rights or privileges of our existing stockholders,except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any such issuance. Althoughthe number of shares of our common stock that our existing stockholders own will not decrease, the shares of our common stock owned byour existing stockholders will represent a smaller percentage of our total outstanding shares of our common stock after any such issuanceof shares of our common stock to Lincoln Park under the Purchase Agreement.

The following table sets forth the amount of grossproceeds we would receive from Lincoln Park from our sale of up to 5,000,000 Purchase Shares (which excludes the 989,087 Commitment Sharesthat we issued to Lincoln Park on July 24, 2023, for which we will receive no cash proceeds) that we are registering hereby that we mayissue and sell to Lincoln Park in the future under the Purchase Agreement at varying purchase prices from and after the Commencement Date:

SELLINGSTOCKHOLDER

The This prospectus relates to the possible resaleby the selling stockholder, Lincoln Park, of up to 5,989,087 shares of our common stock, consisting of: (i) 989,087 Commitment Sharesthat we issued to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the Purchase Agreementand (ii) up to 5,000,000 shares of common stock that we have reserved for issuance and sale to Lincoln Park as Purchase Shares under thePurchase Agreement from time to time from and after the Commencement Date, if and when we determine to sell shares of our common stockto Lincoln Park under the Purchase Agreement.

We are filing the registration statement of whichthis prospectus forms a part pursuant to the provisions of the Registration Rights Agreement, which we entered into with Lincoln Parkon July 24, 2023 concurrently with our execution of the Purchase Agreement, in which we agreed to provide certain registration rightswith respect to resales by Lincoln Park of the shares of our common stock that have been or may be issued to Lincoln Park under the PurchaseAgreement. The selling stockholder may sell some, all or none of the shares of common stock included in this prospectus. We do not knowhow long the selling stockholder will hold the shares of our common stock before selling them, and we currently have no agreements, arrangementsor understandings with the selling stockholder regarding the sale of any of the shares of common stock. See “Plan of Distribution.”

The table below sets forth, to our knowledge,information concerning the beneficial ownership of shares of our common stock by the selling stockholder as of May 16, 2023. The percentagesof shares owned before and after the offering are based on 22,612,856 shares of common stock outstanding as of September 11, 2023, whichincludes the 989,087 Commitment Shares that we issued to Lincoln Park following our execution of the Purchase Agreement on July 24, 2023.The information in the table below with respect to the selling stockholder has been obtained from the selling stockholder.

Beneficial ownership is determined in accordancewith the rules of the SEC and includes voting or investment power with respect to shares. The inclusion of any shares in this table doesnot constitute an admission of beneficial ownership for the person named below.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion andanalysis of our financial condition and results of operations together with our financial statements and the notes to those statementsincluded elsewhere in this Registration Statement on Form S-1. In addition to historical financial information, this discussion and analysiscontains forward-looking statements that reflect our plans, estimates and beliefs. You should not place undue reliance on these forward-lookingstatements, which involve risks and uncertainties. As a result of many factors, including but not limited to those set forth under ’‘RiskFactors,’’ our actual results may differ materially from those anticipated in these forward-looking statements. See “CautionaryNote Regarding Forward-Looking Statements.”

Overview

Tenon Medical, Inc., a medical device companyformed in 2012, has developed a proprietary, U.S. Food and Drug Administration (“FDA”) approved surgical implant-system, whichwe call The Catamaran™ SI Joint Fusion System (“The Catamaran System”). The Catamaran System offers a novel, less invasiveinferior-posterior approach to the sacroiliac joint (“SI Joint”) using a single, robust titanium implant to treat SI Jointdysfunction that often causes severe lower back pain. The system features the Catamaran™ Fixation Device which passes through boththe axial and sagittal planes of the ilium and sacrum, transfixing the SI Joint along its longitudinal axis. Published clinical studieshave shown that 15% to 30% of all chronic lower back pain is associated with the SI Joint.

With an entry similar to the SI Joint injection,the surgical approach is direct to the joint. The angle and trajectory of the inferior-posterior approach is designed to point away fromcritical neural and vascular structures and into the strongest cortical bone. Joined by a patented osteotome bridge, the implant designconsists of two hollow fenestrated pontoons with an open framework to facilitate bony in-growth through the SI Joint. One pontoon fixatesinto the ilium and the other into the sacrum. The osteotome is designed to disrupt the articular portion of the joint to help facilitatea fusion response.

Our initial clinical results indicate that TheCatamaran System implant is promoting fusion across the joint as evidenced by computerized tomography (CT) scans which is the gold standardwidely accepted by the clinical community. We had our national launch of The Catamaran System in October 2022 and are building a salesand marketing infrastructure to market our product and address the greatly underserved market opportunity that exists.

We believe that the implant design and procedurewe have developed, along with the 2D and 3D protocols for proper implantation will be received well by the clinician community who havebeen looking for a next generation device.

We have incurred net losses since our inceptionin 2012. As of June 30, 2023, we had an accumulated deficit of approximately $48.6 million. To date, we have financed our operationsprimarily through an initial public offering, private placements of equity securities, certain debt-related financing arrangements, andsales of our product. We have devoted substantially all of our resources to research and development, regulatory matters and sales andmarketing of our product.

Reverse Stock Split

On April 6, 2022, we effected the Reverse StockSplit. Any fractional shares that would have resulted from the Reverse Stock Split were rounded up to the nearest whole share. Our authorizedcommon stock was not impacted by the Reverse Stock Split. Immediately after the Reverse Stock Split there were 989,954 shares of our commonstock outstanding. Profit per share and share amounts for the condensed consolidated financial statements as of and for the periods endedJune 30, 2022 reflect the impact of the Reverse Stock Split.

Components of Results of Operations

Revenue

We derive substantially all our revenue from salesof The Catamaran System to a limited number of clinicians. 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 orthopedic companies, ourrevenue can also fluctuate from quarter to quarter due to a variety of factors, including reimbursement, changes in independent salesrepresentatives and physician activities.

Cost of Goods Sold, Gross Profit, and GrossMargin

We utilize contract manufacturers for productionof The Catamaran System implants and Catamaran Tray Sets. Cost of goods sold consists primarily of costs of the components of The CatamaranSystem implants and instruments, quality inspection, packaging, scrap and inventory obsolescence, as well as distribution-related expensessuch 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 continueto 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 expensesand consist of consulting expenses, salaries, sales commissions and other cash and stock-based compensation related expenses. We expectoperating expenses to increase in absolute dollars as we continue to invest and grow our business.

Sales and Marketing Expenses

Sales and marketing expenses primarily consistof independent sales representative training and commissions in addition to salaries and stock-based compensation expense. Starting inMay 2021, commissions to our national distributor have been based on a percentage of sales and we anticipate that these commissions willmake up a significant portion of our sales and marketing expenses. We expect our sales and marketing expenses to increase in absolutedollars with the commercial launch of The Catamaran System resulting in higher commissions and salaries, increased clinician and salesrepresentative training, and the start of clinical studies to gain wider clinician adoption of The Catamaran System. Our sales and marketingexpenses 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 primarilyconsist of engineering, product development, regulatory expenses, and consulting services, outside prototyping services, outside researchactivities, materials, and other costs associated with development of our product. Research and development expenses also include relatedpersonnel and consultants’ compensation and stock-based compensation expense. We expense research and development costs as theyare incurred. We expect research and development expense to increase in absolute dollars as we improve The Catamaran System, develop newproducts, add research and development personnel, and undergo clinical activities that may be required for regulatory clearances of futureproducts.

General and Administrative Expenses

General and administrative expenses primarilyconsist 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 as we add personneland information technology infrastructure to support the growth of our business. We also expect to incur additional general and administrativeexpenses as a result of operating as a public company, including but not limited to: expenses related to compliance with the rules andregulations of the SEC and those of The Nasdaq Stock Market LLC on which our securities are traded; additional insurance expenses; investorrelations activities; and other administrative and professional services. While we expect the general and administrative expenses to increasein absolute dollars, we anticipate that it will decrease as a percentage of revenue over time.

Gain (Loss) on Investments, Interest Expenseand Other Income (Expense), Net

Gain (loss) on investments consists of interestincome and realized gains and losses from the sale of our investments in money market and corporate debt securities. Interest expenseis related to borrowings and includes deemed interest derived from the beneficial conversion prices of notes payable. Other income andexpenses have not been significant to date.

Results of Operations

The following table sets forth our results ofoperations for the periods presented (in thousands):

The following table sets forth our results ofoperations as a percentage of revenue:

Comparison of the Three and Six Months Ended June 30, 2023 and 2022(in thousands, except percentages)

Revenue, Cost of Goods Sold, Gross Profit, and Gross Margin

Revenue. The increase in revenue forthe three and six months ended June 30, 2023 as compared to the same periods in 2022 was primarily due to increases of 463% and 433%,respectively, in the number of surgical procedures in which The Catamaran System was used.

Cost of Goods Sold, Gross Profit, and GrossMargin. The increase in cost of goods sold for the three and six months ended June 30, 2023 as compared to the same periods in2022 was due to increases of 463% and 433%, respectively, in the number of surgical procedures performed. Gross loss and gross marginpercentage improved due to higher revenue associated with the increase in the number of surgical procedures.

Operating Expenses

Research and Development Expenses. Researchand development expenses for the three months ended June 30, 2023 increased as compared to the same period in 2022 primarily due to increasedstock-based compensation ($200) and payroll expenses ($100), partially offset by decreased professional fees ($37).

Research and development expenses for the sixmonths ended June 30, 2023 increased as compared to the same period in 2022 primarily due to increased stock-based compensation ($543)and payroll expenses ($116), partially offset by decreased professional fees ($45).

Sales and Marketing Expenses. Salesand marketing expenses for the three months ended June 30, 2023 decreased as compared to the same period in 2022 primarily due to decreasedconsulting and professional fees ($1,340), partially offset by increased payroll expenses ($670), SpineSource transition expenses ($260),sales commissions ($278), and stock-based compensation ($46) The increase in payroll and payroll related expenses is primarily due tothe increased number of sales and marketing employees as we build out our sales function.

Sales and marketing expenses for the six monthsended June 30, 2023 increased as compared to the same period in 2022 primarily due to increased payroll expenses ($1,330), SpineSourcetransition expenses ($690), sales commissions ($610) and stock-based compensation ($92), partially offset by decreased consulting andprofessional fees ($1,129). The increase in payroll and payroll related expenses is primarily due to the increased number of sales andmarketing employees as we build out our sales function.

General and Administrative Expenses. Generaland administrative expenses for the three months ended June 30, 2023 decreased as compared to the same period in 2022 primarily due toa legal settlement accrual in 2022 ($574) and decreased professional service fees ($517) partially offset by increased stock-based compensation($256), and payroll expenses ($62).

General and administrative expenses for the sixmonths ended June 30, 2023 decreased as compared to the same period in 2022 primarily due to a legal settlement accrual in 2022 ($574)and decreased professional service fees ($489), partially offset by increased stock-based compensation ($738) and payroll expenses ($245).The increase in general and administrative expenses in 2023 exclusive of the legal settlement accrual was primarily due to the Company’songoing transition to an operating company and the creation of an infrastructure to support future growth through the hiring of employees.

Gain (Loss) on Investments, Interest Expenseand Other Income (Expense), Net

Gain on investments for the three and six monthsended June 30, 2023 increased approximately $2 and $57, respectively, as compared to the three and six months ended June 30, 2022 dueto interest on our investments in money market and corporate debt securities. We had no interest expense for the three and six monthsended June 30, 2023 and interest expense for the three and six months ended June 30, 2022 of $88 and $362 related to our convertible debt.

Liquidity and Capital Resources; Going Concern

As of June 30, 2023, we had cash and cash equivalentsand short-term investments of approximately $6.3 million. Since inception, we have financed our operations through private placementsof preferred stock, debt financing arrangements, our initial public offering and the sale of our products. As of June 30, 2023, we hadno outstanding debt.

As of June 30, 2023, we had an accumulated deficitof approximately $48.6 million and expect to incur additional losses in the future. We have not achieved positive cash flow fromoperations to date. On April 29, 2022, we closed an initial public offering of our common stock. On June 16, 2023, we closed a registeredpublic offering. Based upon our current operating plan, we believe that our existing cash and cash equivalents will not be sufficientto fund our operating expenses and capital expenditure requirements through at least the next 12 months from the date these consolidatedfinancial statements were available to be released. We plan to raise the necessary additional capital through one or a combination ofpublic or private equity offerings, debt financings, and collaborations. 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 fromThe Catamaran System; (b) changes we may make to the business that affect ongoing operating expenses; (c) changes we may makein our business strategy; (d) regulatory developments affecting our existing products; (e) changes we may make in our researchand development spending plans; and (f) other items affecting our forecasted level of expenditures and use of cash resources.

As we attempt to raise additional capital to fundour operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing whenneeded, we may have to delay, reduce the scope of or suspend one or more of our sales and marketing efforts, research and developmentactivities, or other operations. We may seek to raise any necessary additional capital through a combination of public or private equityofferings, debt financings, and collaborations. If we do raise additional capital through public or private equity offerings, the ownershipinterest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferencesthat adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenantslimiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaringdividends. If we are unable to raise capital, we will need to delay, reduce, or terminate planned activities to reduce costs. Doing sowill likely harm our ability to execute our business plans. Due to the uncertainty in our ability to raise capital, management believesthat there is substantial doubt in our ability to continue as a going concern for the next twelve months from the issuance of these consolidatedfinancial statements.

We plan to use our cash within the twelve monthsfrom June 30, 2023 and beyond for working capital and research and development.

Contractual Obligations

The following table summarizes our contractual obligations as of June30, 2023:

Obligations under Terminated Sales RepresentativeAgreement: On October 6, 2022, we entered into the Terminating Amended and Restated Exclusive Sales Representative Agreement (the“Termination Agreement”). In accordance with the Termination Agreement, (i) we paid the Representative $1,000 in cash; and(ii) we agreed to pay the Representative (a) $85 per month during the six months after the date of the Termination Agreement in returnfor efforts by the Representative to transition operations to us, (b) 20% of net sales of the Product sold in the United States and PuertoRico until December 31, 2023 and (c) after December 31, 2023, 10% of net sales until such time as the aggregate amount paid to the Representativeunder this clause (c) and clause (b) above equal $3,600. In the event of an acquisition, we will pay the Representative $3,600 less previousamounts paid pursuant to clause (b) and clause (c) above. The timing of the payments under clause (b) and (c) is variable depending onthe timing of our sales.

Cash Flows (in thousands, except percentages)

The following table sets forth the primary sourcesand uses of cash for each of the periods presented below:

The decrease in net cash used in operating activitiesfor the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 was primarily attributable to our increased netloss of $1.3 million, adjusted for increases in non-cash stock-based compensation expenses ($1,373) and a decrease in common stockissued for services (1,561), in addition to increases in inventory ($285) and accounts payable ($495).

Cash provided by investing activities for thesix months ended June 30, 2023 consisted primarily of the net sales of short-term investments of approximately $6.0 million to use tofund our operations, partially offset by purchases of property and equipment of $0.2 million. Cash used in investing activities for thesix months ended June 30, 2022 consisted primarily of the net purchases of short-term investments of $3.7 million and purchases of propertyand equipment of $0.2 million.

Cash provided by financing activities for thesix months ended June 30, 2023 consisted primarily of the $4.8 million, net of relevant expenses, received from our registered offeringin June 2023. Cash provided by financing activities for the six months ended June 30, 2022 consisted of the $14.1 million cash receivedfrom our initial public offering in April 2022, net of relevant expenses.

Critical Accounting Policies, Significant Judgments,and Use of Estimates

Our management’s discussion and analysisof our financial condition and results of operations is based on our financial statements, which have been prepared in accordance withU.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amountsof assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well asthe reported results of operations during the reporting periods. Our estimates are based on our historical experience and on various otherfactors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carryingvalues of assets and liabilities that are not readily apparent from three other sources. Actual results could differ from these estimatesunder different assumptions or conditions. For the six months ended June 30, 2023, there were no significant changes to our existing criticalaccounting policies from those disclosed on our Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

As of June 30, 2023, and December 31, 2022, wedid not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purposeentities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractuallynarrow or limited purposes.

BUSINESS

Introduction

Tenon Medical, Inc. was incorporated in the Stateof Delaware on June 19, 2012 and was headquartered in San Ramon, California until June 2021 when it relocated to Los Gatos, California.We are a medical device company that offers a novel, less invasive approach to the sacroiliac joint using a single, robust, titanium implantfor treatment of the most common types of sacroiliac joint disorders that cause lower back pain. The system features the CATAMARAN™Fixation Device which passes through both the axial and sagittal planes of the ilium and sacrum, stabilizing and transfixing the SI jointalong its longitudinal axis. The angle and trajectory of the Catamaran surgical approach is also designed to provide a pathway away fromcritical neural and vascular structures and into the strongest cortical bone. We received FDA clearance in 2018 for The CATAMARAN System.We commercially launched The CATAMARAN System nationally in October 2022 at the North American Spine Society meeting held in Chicago.Our primary commercial focus will be the U.S. market.

The Opportunity

We estimate that over 30 million Americanadults have chronic lower back pain. Published clinical studies have shown that 15% to 30% of all chronic lower back pain is associatedwith the SI-Joint. For patients whose chronic lower back pain stems from the Sacroiliac Joint, our experience in both clinical trialsand commercial settings indicates the system to be introduced by Tenon could be beneficial for patients who are properly diagnosed andscreened for surgery by trained healthcare providers.

In 2019, approximately 475,000 patients in theUnited States were estimated to have received an aesthetic injection to temporarily alleviate pain emanating from the SI-Joint and/orto diagnose SI-Joint pain. Additionally, several non-surgical technologies have been introduced in the past 10 years to address patientswho do not respond to injection therapy, including systemic oral medications and opioids.

To date, the penetration of a surgical solutionfor this market has been relatively low (5-7%). We believe this is due to complex surgical approaches and suboptimal implant design ofexisting options. The penetration of this market with an optimized surgical solution is Tenon’s focus.

We believe the SI-Joint is the last major jointto be successfully addressed by the orthopedic implant industry. Studies have shown that disability resulting from disease of the SI-Jointis comparable to the disability associated with a number of other serious orthopedic conditions, such as knee and hip arthritis and degenerativedisc 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 synovialjoint situated between the lumbar spine and the pelvis and is aligned along the longitudinal load bearing axis of the human spine whenin an upright posture. It functions as a force transfer conduit where it transfers axial loads bi-directionally from the spine to thepelvis and lower extremities and allows forces to be transmitted from the extremities to the spine. It also provides load sharing betweenthe 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 thatconnects 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 shearand rotation. Although the rotational forces about the SI-Joint are relatively low, repetitive motions created by daily activities suchas walking, jogging, twisting at the hips, and jumping can increase the stresses on the SI-Joint. If the SI-Joint is compromised throughinjury or degeneration, the load bearing and motion restraints from the surrounding anatomical structures of the SI-Joint will be compromisedresulting in abnormal stress transfers across the joint to these structures, thereby further augmenting the degenerative cascade of theSI-Joint. Eventual pain and cessation of an individual’s normal activities due to a painful and unstable SI-Joint have led to anincrease in the recent development of SI-Joint stabilization devices.

Non-Surgical Treatment of Sacroiliac JointDisease

Several non-surgical treatments exist for suspected sacroiliacjoint pain. These conservative steps often provide desired relief for the patient. Non-surgical treatments include: 

When conservative steps fail to deliver sustainedpain relief and return to quality of life, specific diagnostic protocols are utilized to explore if a surgical option should be considered.

Diagnosis

Historically, diagnosing pain from the SI-Jointwas not routinely a focus of orthopedic 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 taughtin these settings.

The emergence of various SI-Joint surgical technologieshas generated a renewed discussion of SI-Joint issues. Of particular focus is the diagnostic protocol utilized to properly select patientsfor SI-Joint surgery. Patients with low back pain typically start with primary care physicians who often refer to pain specialists. Here,the patient will undergo traditional physical therapy combined with oral medications (anti-inflammatory, narcotic, etc.). If the patientfails to respond to these steps the pain specialist may move to therapeutic injections of the SI-Joint. These injections may serve tolessen inflammation to the point that the patient is satisfied. However, the impact from these injections is often transient. In thiscase the patient is often referred to a clinician to determine if the patient may be a candidate for surgical intervention. A series ofprovocative tests in clinic, combined with a specific injection protocol to isolate the SI-Joint as the pain generator is then utilizedto confirm the need for surgical intervention. Published literature has shown this technique to be a very effective step to determinethe best treatment to alleviate pain.

Limitations of Existing Treatment Options

Surgical fixation and fusion of the SI-Joint withan open surgical technique was first reported in 1908, with further reports in the 1920s. The open procedure uses plates and screws, requiresa 6 to 12-inch incision and is extremely invasive. Due to the high invasiveness and associated morbidity, the useof this procedure is limited to cases involving significant trauma, tumor, etc.

Less invasive surgical options along with implantdesign began to emerge over the past 15 years. These options feature a variety of approaches and implant designs and have been met withvarying 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 ofthese technologies.

The Market

Based on market research and internal estimates,we believe the potential market for surgical intervention of the SI-Joint to be 279,000 procedures annually in the U.S. alone, for a potentialannual market of more than $2.2 billion. These estimates are driven by coding data for SI-Joint injections to treat pain and informedassumptions relative to surgical intervention candidacy.

Based on public information, we believe that thelargest clinical device supplier in this market does approximately 10-11,000 SI-Joint fixations a year representing the largest marketshare. The other competitive devices that are offered are all products generally part of much larger companies with a variety of orthopedicdevices and as such do not specifically call out the number of specific SI-Joint procedures performed with their products. It is our beliefthat all other competitive devices represent approximately another 5,000 potential SI-Joint procedures.

Based on this analysis we believe the market isvastly 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 we are the first company to developand manufacture a novel Inferior Posterior approach featuring a dual pontoon fixation technology cleared by the FDA expressly for SI-Jointfusion. The approach, referred to as Inferior Posterior Sacroiliac Fusion is focused on these critical aspects of the surgical procedure:

Note the trajectory used in the Inferior Posteriorapproach:

Over the past several years, other companies haverecognized the opportunity and have entered the minimally invasive SI-Joint fixation market. However, these products are either screw/triangularrod-based or allograft products, which we believe have disadvantages when compared to The CATAMARAN System.

In the United States, we believe that our primarycompetitors 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 differentlyfrom implantable medical devices made of metallic or other non-tissue-based materials. The following chart is a comparison of specificationsand features among the various available clinical devices:

Current Clinical Device Comparison – SI-Joint

We believe from our study of the market that manyphysicians 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 fusionhave all been cited as reasons for low adoption of these technologies.

The following are the primary factors on which companies compete inour industry:

We believe that refined approaches and improvedimplant design will open the door to enhanced adoption and further penetration of this important market.