VANI US Equity☆

Item 1A. Risk Factors 16

Item 1B. Unresolved Staff Comments 42

Item 2. Properties 42

Item 3. Legal Proceedings 42

Item 4. Mine Safety Disclosures 42

PART II

Item 6. Reserved 44

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 55

Item 8. Financial Statements and Supplementary Data 55

Item 9A. Controls and Procedures 55

Item 9B. Other Information 56

Item 9C. Disclosure regarding foreign jurisdictions that prevent inspections 56

PART III

Item 10. Directors, Executive Officers and Corporate Governance 57

Item 11. Executive Compensation 57

Item 14. Principal Accounting Fees and Services 57

PART IV

Item 15. Exhibits, Financial Statement Schedules 57

SIGNATURES 59

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SECOND SIGHT MEDICAL PRODUCTS INC.

FORM 10-K

CAUTIONARY NOTE REGARDING FORWARD-LOOKING

STATEMENTS

AND FACTORS THAT MAY AFFECT FUTURE RESULTS

This Annual Report

on Form 10-K, or Annual Report, includes forward-looking statements within the meaning of Section 27A of the Securities Act of

1933, as amended, or the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

All statements other than statements of historical fact contained in this Annual Report are forward-looking statements. In some

cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,”

“would,” “should,” “expect,” “plan,”, “anticipate,” “believe,”

“estimate,” “intend,” “predict,” “seek,” “contemplate,” “project,”

“continue,” “potential,” “ongoing” or the negative of these terms or other comparable terminology,

although not all forward-looking statements contain these identifying words. These forward-looking statements include, but are

not limited to, statements about:

Any forward-looking

statements in this Annual Report reflect our current views with respect to future events or to our future financial performance

and involve known and unknown risks, uncertainties, assumptions and other factors described under the “Risk Factors”

section and elsewhere in this Annual Report, that may cause our actual results, performance or achievements to be materially different

from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these uncertainties,

you should not place undue reliance on these forward-looking statements.

In addition, statements

that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements

are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable

basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that

we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are

inherently uncertain and investors are cautioned not to unduly rely upon these statements as predictions of future events. Except

as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information

becomes available in the future.

This Annual Report

also contains estimates, projections and other information concerning our industry, our business, and the markets for certain

diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions.

Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject

to uncertainties and actual events or circumstances may differ materially from events and circumstances

reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from

reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical

and general publications, government data and similar sources.

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Summary of Risks Related to our Business

Some of the factors

that could cause actual results to differ are identified below, as well as those discussed in the Item 1A. Risk Factors section

in this Form 10-K and within MD&A. We note these factors for investors as permitted by the Private Securities Litigation Reform

Act of 1995. The occurrence of any of the risks identified below or in the Item 1A. Risk Factors section in this Form 10-K, or

other risks currently unknown, could have a material adverse effect on our business, financial condition or results of operations,

or we may be required to increase our accruals for contingencies. It is not possible to predict or identify all such factors. Consequently,

you should not consider the following to be a complete discussion of all potential risks or uncertainties:

1. Despite

promising results from the Early Feasibility Study for Orion being conducted at UCLA and Baylor we currently have no commercial

products or product revenue and may never become profitable.

2. We

may face substantial competition in the future and may not be able to keep pace with the rapid technological changes which may

result from others discovering, developing or commercializing products before or more successfully than we do.

3. Despite early

positive results in our limited initial trials at UCLA and Baylor School of Medicine our ongoing development efforts may never

demonstrate the feasibility of our Orion technology.

4. We have not

been profitable to date and expect our operating losses to continue for the foreseeable future; we may never be profitable.

5. There may

be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.

6. The COVID-19

pandemic has had an adverse effect on our business and results of operations and is expected to continue to have further adverse

effects, which could be material, on our business, results of operations, financial condition, liquidity, and capital investments.

7. Any failure

or delay in completing clinical trials or studies for new product candidates or next generation of our products and the expense

of those trials could adversely affect our business.

8. We

have lost key management and staff personnel because of Covid-19 pandemic. If we fail to recruit highly skilled personnel to replace

employees who have left the Company, our ability to identify, develop and commercialize new or next generation product candidates

will be impaired, could result in loss of markets or market share and could make us less competitive.

9. We may become

involved in future lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming

and unsuccessful.

10. We are increasingly

dependent on sophisticated information technology systems, including systems from third parties, and if we fail to properly maintain

the integrity of our data or if our products do not operate as intended, our business could be materially and adversely affected.

11. We will need

additional capital to support our operations and growth. Additional capital may be difficult to obtain restricting our operations

and resulting in additional dilution to our stockholders.

12. Our revenue

from sales of Orion, if approved, will be dependent upon the pricing and reimbursement guidelines adopted in each country and if

pricing and reimbursement levels are inadequate to achieve profitability our operations will suffer.

13. Our product

candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit

the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

14. We may acquire

additional businesses or form strategic alliances in the future, and we may not realize the benefits of such acquisitions or alliances.

15. Although

we believe that our strategy to (i) leverage proven Argus II technology to develop the Orion visual cortical prosthesis and (ii)

significantly expand our addressable market to include a portion of the almost six million patients who are blind from eye trauma,

optic nerve disease and injury, diabetic retinopathy, glaucoma and other currently untreatable causes is more likely to address

a better and faster way to treat many causes of blindness, including the Retinitis Pigmentosa population, we will continue to incur

material near term losses, market uncertainty and our stock may experience significant fluctuations as we continue to focus exclusively

on Orion.

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16.If we are unable

to obtain sufficient funding, we may be unable to execute our business plan and fund operations. We may not be able to obtain

additional financing on commercially reasonable terms, or at all.

17.Although we are

currently in compliance with Nasdaq listing standards in the past we have received notices of deficiencies. If our common stock

is delisted, the market price and liquidity of our common stock and our ability to raise additional capital would be adversely

impacted.

18. Entities

controlled by Gregg Williams, our Chairman of the Board, have the ability to influence or control the outcome of matters submitted

for stockholder approval, may limit your ability to influence outcomes of director elections and may have interests that differ

from those of our other stockholders.

19. We

have the right to issue shares of preferred stock. If we were to issue preferred stock, it is likely to have rights, preferences

and privileges that may adversely affect the common stock.

20. Should any of the various

conditions to our proposed Merger transaction with Nano Precision Medical Inc. fail to be timely satisfied or if the Merger does

not close for any other reason we may be required to pay a termination fee in certain instances, incur substantial cost with

no attendant benefit, and experience other adverse effects on our business, financial results, and/or operations. Even if the

Merger is completed we may experience additional risks associated with the combined company and its ability to develop its products,

finance operations and continue the businesses on an integrated basis.

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PART I

Item 1. Business

Our Company

Overview

Second Sight Medical

Products, Inc. (“Second Sight,” the “Company,” “we,” “us,” “our” or

similar terms) has developed, manufactured and marketed implantable visual prosthetics that are intended to deliver useful artificial

vision to blind individuals. We are a recognized global leader in neuromodulation devices for blindness, and are committed to developing

new technologies to treat the broadest population of sight-impaired individuals.

Leveraging our 20

years of experience in neuromodulation for vision, we are developing the Orion® Visual Cortical Prosthesis System

(“Orion”), an implanted cortical stimulation device intended to provide useful artificial vision to individuals who

are blind due to a wide range of causes, including glaucoma, diabetic retinopathy, optic nerve injury or disease and eye injury.

Orion is intended to convert images captured by a miniature video camera mounted on glasses into a series of small electrical pulses.

The device is designed to bypass diseased or injured eye anatomy and to transmit these electrical pulses wirelessly to an array

of electrodes implanted on the surface of the brain’s visual cortex, where it is intended to provide the perception of patterns

of light. We are conducting a six-subject Early Feasibility Study of the Orion device at the Ronald Reagan UCLA Medical Center

in Los Angeles (“UCLA”) and Baylor College of Medicine in Houston (“Baylor”). Regularly scheduled visits

at both sites were paused in mid-March 2020 due to the coronavirus outbreak, however visits at UCLA resumed mid-September 2020

and Baylor resumed in December 2020. Our 36 month results, all of which were measured after the study resumed, indicate to us that:

No peer-reviewed data

is available yet for the Orion system. We are currently negotiating the clinical and regulatory pathway to commercialization with

the FDA as part of the Breakthrough Devices Program.

Product and Clinical Development Plans

By further developing

our visual cortical prosthesis, Orion, we believe we may be able to significantly expand our market to include nearly all profoundly

blind individuals. The principal notable exceptions for potential use of the Orion are those who are blind due to otherwise currently

treatable diseases, individuals who are born blind, or blindness due to direct damage of the visual cortex, which is rare. However,

of the estimated 36 million blind people worldwide, there are approximately 5.8 million people who are legally blind due to causes

that are not otherwise treatable. We continue to develop and refine our estimates of the potential addressable market size as we

evaluate the commercial prospects for Orion using a combination of published sources, third party market research, and physician

feedback. We currently estimate over 500,000 individuals in the US are legally blind due to retinitis pigmentosa, glaucoma, diabetic

retinopathy, optic nerve disease and eye injury. Of this population, we estimate the potential US addressable market is between

50,000 and 100,000 individuals with bi-lateral blindness at the light-perception level or worse. Our marketing approvals by the

FDA and other regulatory agencies will ultimately determine the subset of these patients who are eligible for the Orion based on

our clinical trials and the associated results.

Our objective in designing

and developing the Orion visual prosthesis system is to bypass the optic nerve and directly stimulate the part of the brain responsible

for human vision. A six-subject Early Feasibility Study of the Orion device is currently underway at UCLA and Baylor. Our 36 month

results indicate a good safety profile with encouraging efficacy data and benefits in helping subjects perform their daily living

tasks. We believe these data results are encouraging and support advancement of Orion into a larger pivotal clinical study. Early

promising results are not necessarily indicative of results which may be obtained in our larger Orion clinical trials.

In November 2017,

the FDA granted Breakthrough Devices Program designation for the Orion. This designation is given to a few select medical devices

in order to provide more effective treatment of life-threatening or irreversibly debilitating diseases or conditions. This program

is intended to help patients have more timely access to these medical devices by expediting their development, assessment, and

review.

On February 26, 2021,

the U.S. Food and Drug Administration (FDA) approved the Argus 2s Retinal Prosthesis System, a redesigned set of external hardware

(glasses and video processing unit) initially for use in combination with previously implanted Argus II systems for the treatment

of retinitis pigmentosa (RP). The Company expects that the Argus 2s will be adapted to be the external system for the next generation

Orion Visual Cortical Prosthesis System currently under development. In addition to ergonomic improvements, the Argus 2s system

offers significantly more processing power, potentially allowing for improved video processing.

Our principal offices are located in Los Angeles, California.

Our first commercially

approved product, the Argus® II Retinal Prosthesis System (“Argus II”), treats outer retinal degenerations,

such as retinitis pigmentosa, also referred to as RP. The Argus II was the only retinal prosthesis approved in the United States

by the Food and Drug Administration (“FDA”), and was the first approved retinal prosthesis in the world. RP is a hereditary

disease, affecting an estimated 1.5 million people worldwide including about 100,000 people in the United States, that causes a

progressive degeneration of the light-sensitive cells of the retina, leading to significant visual impairment

and ultimately blindness. A subset of these patients would be eligible for the Argus II since the approved baseline vision for

the Argus II is worse than legally blind (20/200). We commissioned 3rd party market research to estimate the size of the RP market

that resulted in an estimate of approximately 1,500 patients in the US with advanced RP that could be treated with the Argus II

given the eligibility criteria of our label.

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We began selling the

Argus II System in Europe at the end of 2011, Saudi Arabia in 2012, the United States and Canada in 2014, Turkey in 2015, Iran,

Taiwan, South Korea and Russia in 2017, and Singapore in 2018. Given the limited addressable market of Argus II, we no longer market

the Argus II and have focused all of our resources on the development of Orion.

We are also researching

multiple technologies that we believe to be complimentary to artificial vision and could potentially provide significant enhancements

to the Orion user experience. In most cases, we collaborate with 3rd party firms to advance and integrate these innovative technologies

with our artificial vision systems. Examples of technologies that we believe will be complimentary to our products include: eye

tracking, object recognition and localization, thermal imaging and depth-based decluttering.

In early March 2020,

we commenced clinical validation activities for the FLORA-20 instrument, the primary efficacy endpoint we have selected for our

future pivotal clinical trial of Orion. In mid-March 2020, our validation activities were suspended as a result of public health

concerns and related social distancing due to COVID-19. We are in the process of evaluating when activities related to the validation

study can be resumed.

In May 2020, we completed

an underwritten public offering of 7,500,000 shares of common stock at an offering price of $1.00 per share for aggregate gross

proceeds of $7.5 million, and net proceeds of approximately $6.7 million after deducting underwriting discounts, commissions and

other offering expenses.

In May 2020, we entered

into a Letter Agreement with Sylmar Biomedical Park, LLC (the “Landlord”) to terminate our facility leases in which

we agreed to vacate the premises by June 18, 2020 and pay $210,730 to bring our leases current and pay a one-time early termination

fee of $150,000. Prior to the early termination, we were obligated to pay aggregate base rent of approximately $0.9 million and

common area maintenance expenses for the respective remaining terms of our leases in February 2022 and April 2023.

We completed our offer

to rescind certain purchases of shares under our ESPP plan on May 27, 2020. We voluntarily offered to rescind the sale of shares

of our common stock to employees who purchased those shares under the ESPP and to reimburse any losses upon the sale of our shares

of our common stock for certain purchase periods because these shares may not have been exempt from registration under the Securities

Act of 1933. The rescission of these share purchases resulted in the repurchase and cancelation of 39,467 shares of our common

stock. The total cost for the repurchase of these shares and the reimbursement of any losses from the sale of such shares totaled

approximately $270,000.

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In June 2020, we commenced a process to dissolve our

Swiss subsidiary which is still in process.

On December 8, 2020,

we borrowed $1 million from Gregg Williams, Chairman of the Board of Directors of the Company and $1.2 million from two unaffiliated

shareholders. Each promissory note was unsecured and accrued interest at a rate of twelve percent (12%) per annum beginning on

receipt of the loan amounts. We repaid the principal and accrued interest of $135,000 during the quarter ended June 30, 2021.

On January 22, 2021,

we entered into a lease agreement, effective February 1, 2021, to sub-lease office space to replace our existing headquarters.

We will pay $17,000 per month, increasing to $17,500 per month on February 1, 2022, plus operating expenses, to lease 17,290 square

feet of office space at 13170 Telfair Avenue, Sylmar CA 91342. Additionally, we received full rent abatement for March 2021, and

will receive half rent abatement for March 2022. The sub-lease is for two years and two months. We are not affiliates with, or

related to, or otherwise have any other relationship with the other parties, other than the lease.

On March 23, 2021,

we closed our private placement to seven institutional investors of 4,650,000 shares of common stock at a price of $6.00 per share

for aggregate net proceeds of approximately $24.5 million.

On March 26, 2021,

the Board of Directors appointed Scott Dunbar to replace Matthew Pfeffer, as acting Chief Executive Officer. Mr. Pfeffer resumed

his role as a director at such date.

On June 25, 2021, we

closed an underwritten public offering of 11,500,000 shares of common stock at a price of $5.00 per share for aggregate net proceeds

of $53.3 million.

On

February 4, 2022, we entered into an agreement and plan of merger with Nano Precision Medical, Inc., a California corporation,

and, upon and subject to the execution of a joinder, NPM Acquisition Corp., a California corporation and a wholly-owned subsidiary

of the Company (“Merger Sub”). Pursuant to the agreement and subject to the terms and conditions set forth therein,

NPM will merge with and into Merger Sub (the “Merger”), and upon consummation of the merger, Merger Sub will cease

to exist and NPM will become a wholly-owned subsidiary of the Company. Upon completion of the merger and subject to shareholder

approval, the Company will change its name as agreed in the future and may change its trading symbol as NPM requests in writing

following consultation with Nasdaq.

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Our Technology

Orion works by converting

video images captured by a miniature camera housed in a user’s glasses into a series of small electrical pulses that are

transmitted wirelessly to an array of electrodes. The Orion array is implanted on the surface of the visual cortex of the brain,

bypassing the eye and optic nerve and directly stimulating the region of the brain responsible for vision. The pulses generated

are intended to create a perception of patterns of light in the brain. Following the implant surgery, users learn to interpret

these visual patterns as artificial vision, allowing them to detect shapes of people and objects in their surroundings.

We believe Orion possesses

several unique technological advancements compared to other neurostimulation devices, including a hermetic package with the smallest

size and largest number of individually programmable electrodes, and a patented electrode material that allows for high charge

densities and small electrode size. Several other engineering challenges, including device reliability, extended lifetime, and

a safe and effective bio-interface, were overcome during the development of the products and these solutions have been protected

both by patents and by trade secrets. Much of the technology developed for Argus II is also used in Orion. As of December 31, 2021,

we have more than 300 issued patents and over 15 pending patent applications worldwide.

We have demonstrated

the ability to design products with long-term reliability. The Argus I retinal prosthesis, a proof of concept device that was a

predecessor to the Argus II, was implanted in six patients in the United States. Argus I patients were implanted an average of

almost seven years, with one patient having used the device for over 10 years. The Argus II system has been implanted in over 350

patients. The average implant duration for these patients is nearly five years with several users continuing to use the system

10 years following implantation.

In November 2017, the

FDA granted Breakthrough Devices Program designation for the Orion. This designation is given to a select number of medical devices

in order to provide more effective treatment of life-threatening or irreversibly debilitating diseases or conditions. This program

is intended to help patients have more timely access to these medical devices by expediting their development, assessment, and

review. With this designation, we believe the Orion will have the following advantages during the FDA review process:

We expect that inclusion

in the Breakthrough Devices Program may shorten the timeline required to bring the Orion to market as a commercial product. We

also are currently evaluating our pivotal trial design for Orion and hope to reach consensus with the FDA on design specifics.

Major elements of our clinical trial design include the number of patients, study duration, and the endpoints suitable for assessing

visual function, functional vision and quality of life. We have reached agreement with FDA on the primary effectiveness endpoint,

pending validation of an assessment we have developed for the purpose. We are currently working with FDA on alignment on a primary

safety endpoint and confirmation of a statistical sample size which will drive the number of subjects to be enrolled in the pivotal

study. While negotiations with the FDA are ongoing, we believe the study design will require a minimum pre-market sample population

of at least 45 subjects (plus additional post-market subjects) with at least 12 months of follow-up data for each patient prior

to submittal of a premarket approval (PMA) application.

Our Markets

According to the World

Health Organization (WHO)1, 253 million people suffer from moderate to severe vision impairment worldwide. Of these, 36 million

people are considered legally blind. The WHO further estimates that 80% of legal blindness is avoidable, leaving 7.8 million legally

blind individuals. We continue to develop and refine our estimates of the potential addressable

market size as we evaluate the commercial prospects for Orion using a combination of published sources, third-party market research,

and physician feedback.

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In the U.S., 1.3 million

people are legally blind3. We commissioned third-party market research for the potential market for Orion and we currently estimate

over 500,000 individuals in the U.S. are legally blind. Of this population, we estimate the potential U.S. addressable market is

between 50,000 and 100,000 individuals with bi-lateral blindness at the light-perception level or worse. Our marketing approvals

by the FDA and other regulatory agencies will ultimately determine the subset of these patients who are eligible for the Orion

based on our clinical trials and the associated results.

Many other diseases

can also cause blindness. Many of the largest causes of visual impairment (i.e. refractive error and cataracts) are avoidable or

curable, and their prolonged or untreated impact on vision is largely observed in developing nations and are not part of our target

market. Some other causes of blindness, such as brain trauma to the visual cortex, may also not be suitable for treatment by a

cortical stimulator. However, the remaining causes of severe vision loss which include glaucoma, diabetic retinopathy, eye trauma,

optic nerve disease or injury and many others can result in severe visual impairment that could potentially be treatable by an

Orion visual prosthesis system.

We believe that, if

approved by the FDA, the Orion will initially treat a subset of these legally blind individuals, likely starting with the ones

who are completely blind. If this is the case, we anticipate that if we are further able to collect additional clinical data demonstrating

the efficacy of the Orion for patients with better vision, we will be able to expand the approved indications and addressable market

of the Orion to include a larger subset of these 5.8 million individuals for whom no effective treatment currently exists.

By further developing

our visual cortical prosthesis, Orion, we believe we will significantly expand our market to include nearly all profoundly blind

individuals. The only notable exceptions for potential use of the Orion are those who are blind due to otherwise currently treatable

diseases, individuals who are born blind, or blindness due to direct damage of the visual cortex, which is rare.

1 WHO Fact Sheet, updated October 11,

2018.

2 Congdon

N, O’Colmain B, Klaver CC, et al. Causes and prevalence of visual impairment among adults in the United States. Arch

Ophthalmol. Apr 2004;122(4):477-485. This percent amount was derived from the rates of different causes of blindness by different

races and racial demographic data from 2010 U.S. Census data.

3 National Eye Institute (http://www.nei.nih.gov/eyedata/blind.asp).

Our Strategy

Our strategy can be summarized as follows:

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Global Reimbursement

Obtaining

reimbursement from governmental and private insurance companies is critical to our commercial success. Due to the price of

the Orion system, our future sales would be limited without the availability of third-party reimbursement. In the U.S.,

coding, coverage, and payment are necessary for the surgical procedure and Orion system to be reimbursed by payors. Coding

will need to be established for the device and the surgical procedure. Coverage and payment vary by payor. The majority of

Argus II patients were eligible for Medicare, and coverage was primarily provided through traditional Medicare, sometimes

referred to as Medicare Fee-for-Service (“FFS”) or Medicare Advantage. A small percentage of patients were covered

by commercial insurers.

Currently, we are in

the process of evaluating potential reimbursement pathways for Orion in the U.S. market. Compared to Argus II, which was largely

catering to the Medicare patient population, Orion is expected to address a patient population with a more diverse and balanced

payor mix due to our potential indications profile and expected younger patient population, on average. As Orion is a part of the

FDA’s Breakthrough Devices program, we are closely evaluating a variety of fast-track reimbursement programs, including recent

encouraging announcements from CMS proposing modernization of payment policies for medical devices that meet FDA’s Breakthrough

Devices designation. We have also approached some commercial payors and CMS to get their feedback to ensure our overall reimbursement

strategy for Orion therapy will cater to their key data requirements.

Market Development Plans

Orion. By further

developing our visual cortical prosthesis, Orion, we believe we may be able to significantly expand our market to include nearly

all profoundly blind individuals. The only notable exceptions for potential use of the Orion are those who are blind due to otherwise

currently treatable diseases, individuals who are born blind, or blindness due to direct damage of the visual cortex, which is

rare. However, of the estimated 36 million blind people worldwide, there are approximately 5.8 million people who are legally blind

due to causes that are not otherwise treatable. We continue to develop and refine our estimates of the potential addressable market

size as we evaluate the commercial prospects for Orion using a combination of published sources, third party market research, and

physician feedback. We currently estimate over 500,000 individuals in the US are legally blind due to retinitis pigmentosa, glaucoma,

diabetic retinopathy, optic nerve disease and eye injury. Of this population, we estimate the potential US addressable market is

between 50,000 and 100,000 individuals with bi-lateral blindness at the light-perception level or worse. Our marketing approvals

by the FDA and other regulatory agencies will ultimately determine the subset of these patients who are eligible for the Orion

based on our clinical trials and the associated results.

Our objective in designing

and developing the Orion visual prosthesis system is to bypass the optic nerve and directly stimulate the part of the brain responsible

for human vision. A six-subject Early Feasibility Study of the Orion device is currently underway at UCLA and Baylor. Regularly

scheduled visits at both sites were placed on hold in mid-March due to Covid-19, however visits at UCLA resumed mid-September 2020

and Baylor resumed in December 2020. Our 36 month results for the six subjects indicate a good safety profile with encouraging

efficacy data and benefits in helping subjects perform their daily living tasks. We believe these data are encouraging and support

advancement of Orion into a larger pivotal clinical study. Early promising results are not necessarily indicative of results which

may be obtained in large clinical trials. No assurance can be given

that we will achieve similar results in our larger Orion clinical trials. No peer-reviewed data is available yet for the Orion

system.

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In November 2017, the

FDA granted Breakthrough Devices Program designation for the Orion. This designation is given to a few select medical devices in

order to provide more effective treatment of life-threatening or irreversibly debilitating diseases or conditions. This program

is intended to help patients have more timely access to these medical devices by expediting their development, assessment, and

review.

COVID-19 Pandemic

In accordance with

local and state guidelines regarding the COVID-19 pandemic, we are requiring all of our employees to wear masks in the office and

use their best judgement to work remotely or work in the office. While many of our employees are accustomed to working remotely,

much of our workforce has not historically been remote. Although we continue to monitor the situation and may adjust our current

policies as more information and public health guidance becomes available, restricting the ability to do business in person may

create operational or other challenges, any of which could harm our business, financial condition and results of operations.

In addition, our clinical

trials have been affected by the COVID-19 outbreak. Patient visits in ongoing clinical trials were delayed, for example, due to

prioritization of hospital resources toward the COVID-19 outbreak, travel restrictions imposed by governments, and the inability

to access sites for initiation and monitoring. Also, some of our suppliers of certain materials used in the development of our

product candidates are located in areas impacted by COVID-19 which could limit our ability to obtain sufficient materials for our

product candidates. COVID-19 has and will continue to adversely affect global economies and financial markets, and may result in

an economic downturn that could affect demand for our product candidates, if approved, and impact our operating results. Even after

the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result of the continued

global economic impact of the pandemic. We cannot anticipate all of the ways in which health epidemics such as COVID-19 could adversely

impact our business. Although we are continuing to monitor and assess the effects of the COVID-19 pandemic on our business, the

ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. See the Risk Factors

section for further discussion of the possible impact of the COVID-19 pandemic on our business.

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Commercial efforts to develop retinal implants by others

include:

Our

Competition

The

U.S. life sciences industry is highly competitive. The treatment of blindness is a significant clinically unmet need and others

continue to make progress. There are several approaches to treating blindness including other visual prostheses and non-electrical

stimulation treatments. Visual prosthesis approach include:

As

we continue to demonstrate the potential benefits and safety profile of Orion, we may face competition from other entities seeking

to develop a visual cortical prosthesis. While we are currently precluded by the exclusion criteria in our Early Feasibility Study

from testing Orion in any indication where a current therapeutic option exists, such as with RP using Argus, we or others may

ultimately seek to demonstrate the potential benefits and safety profile of a visual cortical prosthesis for RP.

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Other

approaches not involving electrical stimulation include:

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Warranty

We generally provide a standard limited warranty for

the Argus II system covering replacement over the following periods after implant:

● three years on implanted epiretinal prosthesis

● two years on wearable components other than batteries and chargers

● three months on batteries and chargers

Based on our experience

to date, the Argus II system has proven to be a reliable device generally performing as intended. We have accrued warranty expense

of $50,000 as of December 31, 2021, which is based upon our historical experience rate.

Our Research Development and Quality Assurance

We have a single facility, located at our principal

office in Los Angeles, California.

We rely on many suppliers

to provide the materials and services necessary to produce and test our products. Many of these materials or services are currently

provided by sole source suppliers. In a number of instances we maintain sole source suppliers because our current purchasing volumes

do not warrant developing more than one supplier. We expect to secure additional providers as our production volumes increase.

If we experience a loss of a sole supplier before confirming an alternative, we risk possible disruptions in our operations. We

attempt to mitigate the sole source risk by, among other things, increasing parts inventory as a partial hedge against interruptions

in parts supply and by actively seeking to develop alternative supplier sources before experiencing any such disruptions.

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Employees

As

of December 31, 2021, we had 15 employees, including 10 in clinical, regulatory and research and development;

and 5 in administration. Of these persons, all are employed in the United States. We believe that the continued success of our

business will depend, in part, on our ability to attract and retain qualified personnel, and we are committed to developing our

people and providing them with opportunities to contribute to our growth and success. None of these employees is covered by a

collective bargaining agreement, and we believe our relationship with our employees is good to excellent.

Properties

Our

principal office and facilities are located at 13170 Telfair Avenue, Sylmar CA 91342, which consists of approximately 17,290 rentable

square feet at a current base rent of about $17,000 per month. Our sub-lease expires in March 2023. We believe that these premises

are adequate for our foreseeable needs.

Available

Information

Our

website address is www.secondsight.com. We make available free of charge through a link provided at our website our Forms 10-K,

10-Q and 8-K as well as any amendments thereto. These reports are available as soon as reasonably practicable after they are filed

with the Securities and Exchange Commission.

Item

1A. Risk Factors

Risks

Related to Dependence on Our Commercial Products

Despite

promising results from the Early Feasibility Study for Orion being conducted at UCLA and Baylor we currently have no commercial

products or product revenue and may never become profitable.

To

date, we have not generated profit from sales of our now discontinued Argus II product and will not generate revenues until we

complete the development and attain the marketing approval for Orion. We have relied principally on financing from the sale of

equity securities and the receipt of government and other grants to fund our operations. We expect that our future financial results

will depend primarily on our success in further developing the Orion, conducting FDA approved clinical trials and obtaining clearance

or approval for, launching, selling and supporting our Orion technology. To establish these operations we will need to expend

significant resources on hiring additional personnel, conducting continued scientific and product research and development, engaging

in further pre-clinical and clinical investigation, giving expanded attention to intellectual property development and prosecution,

seeking domestic and international regulatory approvals, marketing and promotion, capital expenditures, working capital, general

and administrative expenses, and fees and expenses associated with our capital raising efforts. We expect to incur costs and expenses

related to consulting costs, laboratory development costs, hiring of scientists, engineers, sales representatives and other operational

personnel, and the continued development of relationships with potential partners as we continue to seek regulatory clearance

or approval for our products. As a pre-revenue company we continue to incur significant operating losses, and we expect to continue

to incur additional losses for at least the next several years. We cannot assure you that we will generate revenue or be profitable

in the future. Our future or updated Orion products may never be cleared or approved or become commercially viable or accepted

for use.

Investment

in medical device technology entails material uncertainty and is highly speculative. It entails substantial upfront

capital expenditures over time and significant risk that any potential product will fail to demonstrate adequate safety, efficacy,

clinical utility or acceptance by physicians and blind individuals. Investors should evaluate an investment in us in light of

the uncertainties encountered by developing medical technology companies in a competitive environment. There can be no assurance

that our efforts will be successful or that we will ultimately be able to achieve profitability. Even if we achieve profitability,

we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable

could adversely affect the market price of our common stock and could significantly impair our ability to raise capital, expand

our business or continue to implement our business plan.

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Our

commercial and financial success depends on our products being accepted in the market, and if not achieved will result in our

not being able to generate revenues to support our operations.

Even

if we are able to obtain favorable reimbursement within the markets that we serve, commercial success of our products will depend,

among other things, on their acceptance by retinal specialists, ophthalmologists, brain surgeons, general practitioners, low vision

therapists and mobility experts, hospital purchasing and controlling departments, patients, and other members of the medical community.

The degree of market acceptance of any of our product candidates will depend on factors that include:

● cost of treatment;

● pricing and availability of future alternative products;

●

the extent of available third-party coverage or reimbursement;

●

perceived efficacy of the Orion system relative to other future products and medical solutions; and

●

prevalence and severity of adverse side effects associated with treatment.

The

activities of competitive medical device companies, or others, may limit our revenue from the sale of the Orion system.

Our

commercial opportunities for the Orion system may be reduced if our competitors develop or market products that are more effective,

are better tolerated, receive better reimbursement terms, achieve greater acceptance by physicians, have better distribution channels,

or are less costly.

Currently,

to our knowledge, no other medical devices comparable to the Orion system have been approved by regulatory agencies, in

the U.S. or Europe, to restore some functional vision in persons who have become blind due to unpreventable causes. Other

visual prosthesis companies such as Pixium are developing retinal implant technologies to partially restore some vision in

blind patients mainly from age related macular degeneration. Pixium’s initial RP prosthesis product was withdrawn from

the market. A previous competitor, Retina Implant, has withdrawn from the market. Neither Retina Implant nor Pixium has

filed for market approval with the FDA. To our knowledge Pixium has obtained an IDE for a feasibility study in the U.S. for

its PRIMA product, which is directed toward age related macular degeneration or AMD, and is conducting a pivotal trial of

PRIMA in several countries in Europe. The Illinois Institute of Technology’s Intracortical Visual Prosthesis group is

currently recruiting participants for a US early feasibility study of a visual cortical prosthesis, and has recently

implanted one subject. Neuralink has recently demonstrated a cortical implant in animal models. Vision restoration is one of

Neuralink’s stated goals. These and other potentially competitive therapies, if or when developed or brought to market,

may result in pricing and market access pressure even if the Orion system is otherwise viewed as a preferable

therapy.

Many

privately and publicly funded universities and other organizations are engaged in research and development of potentially competitive

products and therapies, such as stem cell and gene therapies, some of which may target multiple indications of our product candidates.

These organizations include pharmaceutical companies, biotechnology companies, public and private universities, hospital centers,

government agencies and research organizations. Our competitors include large and small medical device and biotechnology companies

that may have significant access to capital resources, competitive product pipelines, substantial research and development staff

and facilities, and substantial experience in medical device development.

We

may face substantial competition in the future and may not be able to keep pace with the rapid technological changes which may

result from others discovering, developing or commercializing products before or more successfully than we do.

In

general, the development and commercialization of new medical devices is highly competitive and is characterized by extensive

research and development and rapid technological change. Physicians and persons who may be suitable for the Orion implant likely

will consider many factors including product reliability, clinical outcomes, product availability, price, and product and patient

support services that we may be able to provide. Market share as it develops can shift as a result of technological innovation

and other business factors. Major shifts in industry market share have occurred in connection with product problems, physician

advisories and safety alerts, reflecting the importance of product quality and reliability in the medical device industry, and

any quality problems with our processes, goods and services could harm our reputation for producing high-quality products and

would erode our competitive advantage, sales and market share. Our competitors may develop products or other novel approaches

and technologies

to deal with treating blindness that are more effective, safer or less costly than any that we are developing, and if those products

gain market acceptance our revenue and financial results could be adversely affected.

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If

we fail to develop new products or enhance existing products, our leadership in the markets we serve could erode, and our business,

financial condition and results of operations may be adversely affected.

Despite

early positive results in our limited initial trials at UCLA and Baylor School of Medicine our ongoing development efforts may

never demonstrate the feasibility of our Orion technology.

Our

research and development efforts remain subject to all of the risks associated with the development of new technology. Our Orion

technology, though based on our FDA approved Argus II retinal prosthesis, is not yet fully developed. Development of the underlying

technology, including the further development and refinement of our Orion technology, may be affected by unanticipated technical

or other problems, among other development and research issues, and the possible insufficiency of funds needed in order to complete

development of these products or devices. Regulatory and clinical hurdles, adverse reactions experienced in trials, or other operational

or regulatory challenges also may result in delays and cause us to incur additional expenses that may increase our need for capital

and result in additional losses. For example, three of the six subjects implanted in the Early Feasibility Study have been explanted

by the subjects’ request. While all had been implanted at least three years, the explants represent a limit in the long-term

data that can be collected in the current study. If we cannot complete, or if we experience significant delays in developing

our technology, applications or products for use by those patients who can benefit from vision restoration, particularly after

incurring significant expenditures, our business may fail and investors may lose the entirety of their investment.

Since

we have had an operating history of losses and have no current revenue producing operations, the future of our business is difficult

to evaluate.

To

date, our operations on a consolidated basis have consisted of the continued development and clinical studies of our Orion-focused

technologies and implementation of the early parts of our business plan. We have incurred significant operating losses in each

year since our inception and we will continue to incur additional losses for the next several years. In addition, our losses may

be greater than expected and our operating results may suffer. We have limited historical financial data upon which we may base

our projected revenue and base our planned operating expenses. This operating history makes it difficult to evaluate our technology

or prospective operations and business prospects.

Clinical

development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and initial trials

may not be predictive of future trial results.

Clinical

testing is expensive and can take several or more years to complete, and its outcome is inherently uncertain. Failure or delay

can occur at any time during the clinical trial process. Success in nonclinical studies and early feasibility clinical studies

does not ensure that expanded clinical trials that will be used to support regulatory submissions will be successful. These setbacks

may be caused by, among other things, nonclinical findings made while clinical trials were underway, and safety or efficacy observations

made in clinical trials, including previously unreported adverse events. Even if our clinical trials are completed, the results

may not be sufficient to obtain regulatory approval or clearance for our product candidates.

Interim

“top-line” and preliminary results from our clinical trials that we announce or publish from time to time may change

as more patient data become available and are subject to audit and verification procedures that could result in material changes

in the final data.

From

time to time, we may publish interim top-line or preliminary results from our clinical trials. Interim results from clinical trials

that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment

continues and more patient data become available. Preliminary or top-line results also remain subject to audit and verification

procedures that may result in the final data being materially different from the preliminary data we previously published. As

a result, interim and preliminary data should be viewed with caution until the final data are available. Differences between preliminary

or interim data and final data could significantly harm our business prospects and may cause the trading price of our common stock

to fluctuate significantly.

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