Risk Factors Update Summary

• Issuance of shares representing 113.2% and resale of shares representing 77.6% of total outstanding shares.
• Increased focus on patent protection procedures and compliance to avoid abandonment or lapse of patents.
• Accumulated deficit increased from $226.0 million to $257.2 million as of December 31, 2022 and 2023, respectively.
• The company shifted focus from Esteem FI-AMEI to Acclaim CI, aiming to disrupt the cochlear implant market.
• Submitted IDE for approval in Q1 2024, with approval anticipated by end of Q2 2024 or beginning of Q3 2024.
• Delays in FDA approval may require significant additional capital raising, potentially impacting operations.
• Acclaim CI received Breakthrough Device Designation from the FDA in 2019, enhancing its approval prospects.
• Litigation risks from stockholder derivative actions and class-action lawsuits, impacting investor confidence and financials.
• Dependence on successful commercialization of Acclaim CI for revenue generation, with potential adverse effects.
• Early Feasibility Study results were promising, with three patients enrolled, implanted, and activated.
• Shareholders agreed not to sell 12,905,049 shares until March 29, 2024, or specific conditions.
• Potential financial impact from lawsuits or administrative proceedings involving intellectual property rights.
• Net losses rose from $15.9 million in 2022 to $29.9 million in 2023.
• The company discovered that wearing a hearing aid on top of the Acclaim CI could provide additional improvement.
• Reliance on third-party suppliers for Acclaim CI production, facing risks of supply shortages and quality issues.
• Potential dilution from future equity offerings and issuance of additional shares of common stock.
• Risks related to intellectual property litigation leading to unfavorable publicity and financial drain.
• The company anticipates FDA approval for Acclaim CI in 2026, with a pivotal clinical study of 50-60 patients.
• Anticipate significant incremental costs for commercializing the Acclaim CI.
• Dependence on key executive management, with risks of impeding business plan and growth strategies.
• Reliance on third parties for pre-clinical studies and clinical trials, facing potential costs and delays.
• The company plans to carefully select and train 30 sites for Acclaim CI implantation, expanding to 150 sites.
• Design shortcomings, like signal-to-noise issues, are being addressed with ongoing mitigation strategies.
• Volatility in trading prices of Class A Common Stock and Public Warrants may lead to substantial losses.
• Uncertainty in the addressable market size for Acclaim CI, impacting revenue generation and market share.
• Expect substantial additional funding needs; failure may lead to delays or discontinuation.
• The company intends to add 30 sites annually until there are roughly 150 sites actively implanting the Acclaim CI.
• Concerns about protecting trade secrets and confidential information from misappropriation by employees or third parties.
• Identified material weaknesses in internal control over financial reporting; implementing remediation plan.
• The company relies on a combination of patent, copyright, trademark, and trade secret laws to protect its intellectual property.
• Legal proceedings and securities litigation could result in substantial costs and divert management attention.
• Risks related to patent expiration and limited protection, potentially leading to competition and loss of rights.
• Explanatory paragraph regarding substantial doubt about ability to continue as a going concern.
• Potential adverse effects on market price due to unfavorable resolution of litigation and issuance of additional shares.
• Potential negative impact on business operations and financial condition due to intellectual property litigation.
• The company had rights to 30 issued U.S. patents as of February 29, 2024, estimated to expire between 2025 and 2042.
• Risks associated with trademark protection, potential challenges, and impact on brand recognition.
• The company relies on third-party suppliers for critical sub-assemblies, monitoring and inspecting all components received.
• Uncertainty regarding payment of dividends on Class A Common Stock may impact market price.
• History of net losses and negative cash flow expected to continue in the foreseeable future.
• The company is subject to extensive regulation by the FDA and other authorities in the U.S., as well as comparable authorities in the European Economic Area.