UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, ~~2021~~2022

☐ Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 333-209325

BRAIN SCIENTIFIC INC.

(Name of Registrant in Its Charter)

Nevada		81-0876714
State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

6700 Professional Parkway

Lakewood Ranch, Florida 34240

(Address of principal executive offices)

(917) 388-1578
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Securities registered pursuant to section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes ☒ No ☐

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

Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant based on the closing sales price, or the average bid and asked price on such stock, as June 30, ~~2021~~2022 was $7.~~78M~~9M based on the closing price of $014.3945 per share of of registrant’s common stock as quoted on the OTC Marketplace on that date.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 501,~~578~~242,~~003~~647 shares of Common Stock, $0.001 par value, at March 2831, ~~2022~~2023.

Documents Incorporated by Reference

None

BRAIN SCIENTIFIC INC.

TABLE OF CONTENTS

PART I		1
Item 1.	Business	1
Item 1A.	Risk Factors	2629
Item 1B.	Unresolved Staff Comments	4249
Item 2.	Properties	4349
Item 3.	Legal Proceedings	4349
Item 4.	Mine Safety Disclosures	4350
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4350
Item 6.	[Reserved]	4450
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4451
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	5058
Item 8.	Financial Statements and Supplementary Data	F-1
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	5159
Item 9A.	Controls and Procedures	5159
Item 9B.	Other Information	5261
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	5261
PART III		5362
Item 10.	Directors, Executive Officers and Corporate Governance	5362
Item 11.	Executive Compensation	5767
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6171
Item 13.	Certain Relationships and Related Transactions, and Director Independence	6373
Item 14.	Principal Accounting Fees and Services	6473
PART IV		6574
Item 15.	Exhibits, Financial Statement Schedules	6574
SIGNATURES		7078

BASIS OF PRESENTATION

Brain Scientific Inc. (the “Company”), was incorporated under the laws of the state of Nevada on November 18, 2013 under the name All Soft Gels Inc. ~~The~~ ~~Company~~On on October 1, 2021, the Company acquired Piezo Motion Corp (“Piezo”), a privately held Delaware corporation formed in January 2020. Upon completion of the acquisition, Piezo is treated as the surviving entity and accounting acquirer although the Company was the legal acquirer. Accordingly, the Company’s historical financial statements are those of Piezo~~, the surviving entity and accounting acquirer~~. The Company has two lines of operations The MemoryMD subsidiary group is involved in cloud computing, data analytics and medical device technology in the ~~Neurology~~NeuroTech and brain monitoring industries seeking to commercialize its EEG devices and caps. The Piezo subsidiary group is focused on the ultrasonic standing wave-type piezo motor technology for rotary and linear motion and has experience in the research and development, as well as the manufacturing, of piezo motors for high-tech industries across the globe. The Company is headquartered in Sarasota, Florida.

Reverse Merger and Corporate Restructure

On June 11, 2021, the Company entered into a merger agreement (the “Merger Agreement”) with Piezo and BRSF Acquisition Inc. to acquire Piezo (the “Acquisition”). The transactions contemplated by the Merger Agreement were consummated on October 1, 2021 and, pursuant to the terms of the Merger Agreement, all outstanding shares of Piezo were exchanged for 29347,~~520,454~~333 shares of the Company’s common stock and Piezo became the Company’s wholly owned subsidiary.

The Merger was effected pursuant to the Merger Agreement. The Merger is being accounted for as a reverse merger whereby Piezo is the acquirer for accounting purposes. Piezo is considered the acquiring company for accounting purposes as upon completion of the Merger, Piezo’s former stockholders held a majority of the voting interest of the combined company.

Pursuant to the Merger, the Company issued shares of its common stock to Piezo’s stockholders, at an exchange ratio of 0.03 shares of the Company’s common stock.

All references to common stock, share and per share amounts have been retroactively restated to reflect the reverse recapitalization as if the transaction had taken place as of the beginning of the earliest period presented.

The financial information, including the operating and financial results and audited financial statements included in this Annual Report on Form 10-K are that of the Company as it exists following the Piezo Merger.

In this Annual Report on Form 10-K, unless otherwise specified, all dollar amounts are expressed in United States dollars. Except as otherwise indicated by the context, references in this report to “Company”, “we”, “us” and “our” are references to Brain Scientific Inc. as combined with Piezo Motion Corp., and reflects the prior operations and financial condition of Piezo Motion Corp. before the Merger.

Reverse Stock Split

In connection with preparing for a share offering, the Company effected a one-for-85 reverse stock split of the Company’s common stock. The reverse stock split became effective on February 3, 2023. The par value and authorized shares of common stock and convertible preferred stock were not adjusted as a result of the reverse stock split. All share and per share amounts in the financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to this reverse stock split, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital. The financial statements have also been retroactively adjusted to reflect adjustments to the amounts and conversion prices for convertible debt, stock options and warrants affected in connection with the reverse stock split.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including documents that may be incorporated by reference ininto to this Report, contains forward-looking statements that involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitled “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” but are also contained elsewhere in this Report. In some cases, you can identify forward-looking statements by the words “may”, “might”, “will”, “could”, “would”, “should”, “expect”, “intend”, “plan”, “objective”, “anticipate”, “believe”, “estimate”, “predict”, “project”, “potential”, “target”, “seek”, “contemplate”, “continue”, and “ongoing”. Or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. Forward-looking statements include statements about:

●

Our plans to develop and commercialize our proposed and developing products, technologies, and services (“Products”) this includes both those from Memory MD, Inc. (“Neurology Products”) and Piezo Motion Corp. (“Motion Products”);

●

Our plans for and our expectations regarding work required for approval of our Neurology Products still under development or require pre-approval from US Food and Drug Administration (“FDA”) or foreign regulatory bodies;

●

The timing of and our ability to obtain and maintain regulatory approval of our Neurology Products;

●

The clinical utility of our Neurology products;

●

The market viability of our Motion Products;

●

Our ability to obtain reimbursement coverage for our Neurology Products;

●

Our expectations about the willingness of healthcare professionals to recommend our Neurology Products to their patients;

●

Our expectations about the willingness of manufacturers to move from current motors to our piezo motors;

●

The timing of our planned regulatory filings;

●

Our expectations regarding international opportunities for commercializing our Products under development;

●

Our ability to develop future generations of our Products

●

Our future development priorities;

●

Our future commercialization, marketing and manufacturing capabilities and strategy’

●

Our ability to comply with applicable regulatory requirements

●

Our ability to maintain our intellectual property position.

Forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the ~~industry~~ industry in which we operate, and management’s beliefs and assumptions are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. You should refer to the “Risk Factors” section commencing on page X29 of this Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.

These forward-looking statements speak only as of the date of this Report. 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. You should, however, review the factors and risks and other information we describe in the reports we will file from time to time with the SEC after the date of this Report.

CAUTIONARY NOTE REGARDING INDUSTRY DATA

Unless otherwise indicated, information contained in this Annual Report on Form 10-K concerning our Company, our business, the services we provide and intend to provide, our industry and our general expectations concerning our industry are based on management estimates. Such estimates are derived from publicly available information released by third party sources, as well as data from our internal research, and reflect assumptions made by us based upon such data and our knowledge of the industry, which we believe to be reasonable.

iii

PART 1

ITEM 1 – BUSINESS

History

We were initially organized on November 18, 2013 as a Nevada limited liability company under the name Global Energy Express LLC by the filing of articles of organization with the Secretary of State of the State of Nevada. On December 18, 2015, we converted from a Nevada limited liability company under the name Global Energy Express LLC to a Nevada corporation under the name All Soft Gels Inc. by the filing of articles of conversion and articles of incorporation with the Secretary of State of the State of Nevada. On September 18, 2018, we changed our name from All Soft Gels Inc. to Brain Scientific Inc. and changed our ticker symbol on the OTC Pink market to “BRSF”.

On September 21, 2018, we entered into a merger agreement (the “Merger Agreement”) with MemoryMD, Inc. and AFGG Acquisition Corp. to acquire MemoryMD, Inc. (the “Acquisition”). The transactions contemplated by the Merger Agreement were consummated on September 21, 2018 and, pursuant to the terms of the Merger Agreement, all outstanding shares of MemoryMD were exchanged for shares of our common stock. Accordingly, we acquired 100% of Memory MD, Inc. in exchange for the issuance of shares of our common stock and MemoryMD, Inc. became our wholly-owned subsidiary. In conjunction with the Acquisition, we ceased all direct operations and assigned all of our assets and liabilities from prior to the Acquisition, and assumed and commenced the business of MemoryMD as the sole business of the Company.

On June 11, 2021, we entered into another merger agreement (the “Piezo Merger Agreement”) with Piezo Motion Corp. and BRSF Acquisition Corp. to acquire Piezo. (the “Piezo Acquisition”). The transactions contemplated by the Piezo Merger Agreement were consummated on October 1, 2021. Pursuant to the terms of the Piezo Merger Agreement, all outstanding shares of Piezo were exchanged for shares of our common stock. Accordingly, we acquired 100% of Piezo in exchange for the issuance of shares of our common stock and Piezo became our wholly-owned subsidiary.

Our principal executive office is located at 6700 Professional Parkway, Lakewood Ranch, Florida 34240 and our telephone number is (917) 388-1578. Our website address is www.brainscientific.com. The information on our website is not part of this Annual Report on Form 10-K.

The Company

~~The~~We ~~Company~~are is a MedTech company with two ~~cutting~~innovative ~~edge~~ product lines: ~~Neurology~~neurology and ~~Motion~~motion ~~Products~~products. Since October 1, 2021, ~~the~~we ~~Company~~have ~~has~~ had two direct subsidiaries, each of which is focused on one of our complimentary ~~Product~~product lines. The Neurology Products of Memory MD are designed for neurology-focused medical devices. The Motion Products of Piezo are piezoelectric motors which are fast, precise, tiny and powerful. The piezo motors are designed for and expected to have valuable and beneficial uses as motors within medical devices and devices outside of the MedTech industry. We have developed twelve motor platforms and an ultra-precise micro dosing pump, each of which is presently available commercially. We are also currently developing additional motion products that leverage our patented intellectual property.

~~Our~~The ~~initial~~products ~~Neurology~~of ~~Products~~our ~~are~~subsidiary ~~intended~~Memory toMD, ~~allow~~Inc., ~~for~~hereinafter ~~simplifying~~referred ~~and~~to ~~making~~as ~~more ambulatory~~ the ~~completion~~Neurology ~~of electroencephalography (“EEG”). Further, the NeuroCap and NeuroEEG~~ Products, ~~both 510K FDA cleared,~~ are ~~focused~~medical ondevices ~~providing~~designed ~~efficient~~for ~~tools to~~ the ~~EEG medical~~ neurology market. ~~Our~~The ~~technology~~products ~~allows a miniature, wireless, clinical device capable~~ of ~~recording~~our ansubsidiary ~~EEG~~Piezo ~~and~~Motion ~~provides~~Corp., ~~the data~~hereinafter referred to ~~medical~~as ~~staff without~~ the ~~bulky~~Motion ~~hardware~~Products, orare ~~necessitating~~small apiezoelectric ~~neurology technician to place the cap. The NeuroEEG™~~motors ~~Hardware~~which ~~Platform~~are designed for ~~data collection~~ and ~~NeuroCap™~~expected ~~Software-like Consumables for data collection are anticipated~~ to have ~~strong~~ ~~margins,~~valuable ~~utilizing~~and abeneficial ~~distribution~~uses ~~network~~as tomotors ~~provide~~within ~~access~~medical todevices ~~hospitals, neurologists,~~ and ~~general~~devices ~~practitioners~~outside asof ~~well as~~ the MedTech ~~various telehealth and teleneurology companies~~industry.

Since the merger between Brain Scientific Inc. and Piezo Motion Corp., we have focused on building an experienced team and platform to grow revenues from existing products and introduce new technologies to the market while leveraging our store of intellectual property.

The following diagram illustrates our legal structure for our two primary revenue streams.

To date, substantially all of our revenues have been derived from our Russian subsidiary, Memory MD Russia (“MMDR”), a subsidiary organized by prior management, which has operated as a distributor of third-party medical devices within Russia. The Russian invasion of Ukraine in February 2022 negatively impacted the operation of MMDR. With the uncertainty raised due to the continued Russian invasion of Ukraine, and with such operations no longer part of the Company’s business plan, the Company began winding down the operations of MMDR. Accordingly, during the second quarter of Fiscal 2022, MMDR satisfied its last distribution obligations and laid off all of its employees. Since then, no work has been conducted by MMDR, and the Company has no ongoing operations or employees in Russia. MMDR has no assets or liabilities and is currently a legal entity, waiting to be dissolved by Russian authorities, which we expect will occur during 2023. The Company does not currently sell, import, or export any of its products in, to or from Russia, nor does it plan to engage in such activities in the future. The Office of Foreign Assets Control (OFAC) issues advisories to the public on important issues related to the sanctions programs it administers, including with regards to the Ukraine/Russia related sanctions program. The Company has been monitoring the situation, and none of the customers, vendors and distributors the Company previously worked with in Russia, is currently being sanctioned by the U.S. government, nor were any of its former employees. The Company continues to maintain full compliance with all U.S. Federal laws with regards to the situation and it does not expect things to change in that regard.

~~The~~Products NeuroEEG connects wirelessly to the computer, allowing freedom of movement for the patient and enabling telemedicine applications. Currently, a shortage of EEG testing equipment and technicians exists in some areas. Other technology may require a specialized technician to apply the gel and electrodes individually. A neurology technician may be more expensive and in shorter supply. They may not be staffed and available 24/7 for some hospitals.

~~Piezo has recently completed~~The antwo ~~extensive~~lines ~~engineering program culminating in the development and initial launch~~ of aproducts ~~unique~~that ~~line~~we ofcurrently ~~small~~sell ~~rotary~~are ~~and linear piezomotor products~~ (~~the ‘Blue Series’~~i), ~~control~~Neurology ~~electronics~~Products and ~~associated~~(ii) ~~software.~~Motion ~~Piezo’s motor product line utilizes engineering polymers making them suitable for equipment and for high volume OEM applications~~Products. While there are several types of piezomotor on the market, the design and technology employed by Piezo is very new and combines key advantages, such as superior precision and power density with affordability and ease-of-manufacture.

~~Piezo’s~~Neurology Blue Series piezomotors are available in a variety of sizes and configurations and are divided into twelve core motor platforms which include rotary motors (Models RBS, RAS) and linear motors (Models LCS, LBS and LAS). These core motor models differ in output specification and are further divided into variants/versions which include versions having hollow-shaft and solid-shaft rotors, versions having integrated magnetic and/or optical encoders and versions which are non-magnetic and suitable for use within medical MRI. For each motor product line Piezo has developed hardware control electronics together with motion control software including firmware and operating software. Products

The ~~Company~~Neurology isProducts ~~now~~of ~~positioned~~our tosubsidiary ~~build~~Memory ~~on its MedTech platform~~MD, asInc. ~~well~~are asmedical ~~having~~devices ~~Motion~~and ~~Products~~software ~~which~~products ~~are~~designed ~~able~~for tothe ~~serve~~neurology ~~other~~ market ~~segments~~. We ~~Over~~believe ~~the~~our ~~past~~Neurology ~~year,~~Products ~~the~~represent ~~Company~~a ~~has~~step ~~made~~forward ain ~~concerted~~EEG ~~effort~~technology toand ~~solidify~~may ~~its~~be ~~manufacturing~~used ~~and~~in ~~sales~~a ~~distribution~~wider ~~channels~~range ~~for~~of ~~both~~applications ~~Neurology~~beyond the ~~and~~traditional ~~Motion~~hospital ~~Products~~or neurologist office.

~~Recent~~Electroencephalography, ~~Developments~~or EEG, is a method to identify and to evaluate the electrical activity of the brain. An EEG could be beneficial, when used with other tools in the diagnosis of brain-related issues, including epilepsy, brain activity after a stroke, and sleep disorders. An EEG may also be used to determine the electrical activity of a comatose individual.

~~COVID-19~~Our ~~Pandemic~~initial Neurology Products are intended to allow for simplifying and making more ambulatory the completion of EEG. Further, the NeuroCap™ and NeuroEEG™ Products, both 510K FDA cleared and available for sale, are focused on providing efficient tools to the EEG medical market. Our technology allows a miniature, wireless, clinical device capable of recording an EEG and provides the data to medical staff without the bulky hardware or necessitating a neurology technician to place the cap. The NeuroEEG™ amplifier and desktop software used to store and analyze data captured from the NeuroCap™ are anticipated to have strong margins, utilizing a distribution network to provide access to hospitals, neurologists, and general practitioners as well as the various telehealth and tele-neurology companies.

From a market perspective with our Neurology Products, the COVID-19 pandemic has created an on-going opportunity. As the variants of COVID-19 continue to emerge, an interest exists in use of sanitary medical products, such as NeuroCap, Further, continued stress exists on medical staff across the US. We believe tools which allow for more generalized practitioners to provide EEG testing will become more necessary and relevant within healthcare settings.™

The ~~COVID~~NeuroCap™ is an FDA-19cleared ~~pandemic~~disposable, ~~has~~soft ~~created~~layered ~~challenges~~cap ~~for~~with ~~the~~an ~~supply~~integrated ~~chain~~electrode oncircuit ~~both~~that ~~our~~is ~~Neurology~~designed ~~and~~to ~~our~~address ~~Motion~~existing problems ~~Products~~of conventional EEG systems. ~~Delays~~The insilver ~~receiving~~embedded ~~parts have~~wiring ~~been~~is uppre-gelled, toso 8it ~~weeks~~requires no prepping of the skin before application. NeuroCap™ makes it possible for ~~key~~medical ~~components~~staff of ~~both~~all ~~Products.~~levels Atto ~~present~~perform EEG tests, wewithout ~~are~~having ~~not~~to ~~seeing~~laboriously aapply ~~reduction~~electrodes one-by-one inor ~~these~~spend ~~issues~~considerable ~~for~~time ~~2022~~cleaning an EEG headset after each use.

Russian Invasion of Ukraine

On February 24, 2022, Russia invaded Ukraine. Our Piezo research and development group in Kyiv has not been able to operate from the offices since that time. The team from Kyiv are all working remotely. We do not know when they will have access to the office. Further, we have engineering resources capable of performing the work done in Kyiv from the United States.

We operate a 100% fully-owned subsidiary of Memory MD, Inc., MemoryMD Russia, in Russia. Memory MD Russia is still operating as a medical device distributor. However, we anticipate that the economic sanctions will impact the business. At present, we are unable to determine the full impact of the situation. Further, the political situation may result in our inability to continue operations as a 100% fully-owned subsidiary of a U.S. company. This will not impact the operations of Memory MD, Inc. in the U.S. or internationally.

~~Neurology:~~The ~~Industry~~NeuroCap™ ~~Overview~~works in parallel with the NeuroEEG™ amplifier device to successfully carry out EEG tests. However, the NeuroCap™ can also work with other EEG devices in addition to our NeuroEEG. The NeuroCap™’s electrode placement follows standard alignment pursuant to the international 10-20 system. The acquisition of electrical brain activity is carried out by non-invasive pre-gelled passive Ag/AgCl scalp (cutaneous) electrodes, ensuring maximum comfortability for the wearer. Benefits of NeuroCap™ include:

~~Electroencephalography, or~~● ~~EEG,~~22 iselectrodes ~~a method to identify~~ and ~~evaluate~~19 ~~the~~active ~~electrical~~EEG ~~activity~~channels offor ~~the~~performing ~~brain. The ability to do this dates back to the mid~~high-~~to-late 19th~~quality ~~century~~routine when scientists began to study the brain activity of various animals such as rabbits, dogs, and monkeys. The 1920’s saw the first example of these involving humans, when in 1924 German physiologist and psychiatrist Hans Berger recorded the first human EEG. tests;

~~One of~~● ~~the~~disposable ~~first discoveries was the~~ EEG’s ~~ability~~headset ~~to identify the potential~~ for ~~epileptic~~reducing ~~seizures. As science and scientists began to understand~~ the ~~workings~~risk of ~~the~~contagion ~~EEG,~~and ~~they could identify more beneficial applications of the technology working in combination with other tests. These include applications related to the following:~~ cross-contamination;

● ~~Brain~~pre-gelled ~~activity~~electrodes ~~after~~for areducing ~~stroke~~patient discomfort and concern over messy gels; and

● ~~Dementia,~~malleable ~~including~~structure ~~Alzheimer’s~~and ~~Disease~~adjustable Velcro straps allowing full adjustability during placement in patients with head injuries.

●Expanding its ~~Depression~~potential uses, the NeuroCap™’s easy to follow numbered straps makes application easy by healthcare workers of all skill levels. We estimate preparation for the EEG can be completed in approximately 5 minutes. It is user-friendly and requires minimal training. It can be utilized for EEG testing for up to 4 hours. A routine EEG is reimbursable under several Current Procedural Terminology (CPT®) codes referring to a routine EEG.

●To date, ~~Migraine~~initial sales of NeuroCap™ have been made direct to a small number of hospitals and clinics. In February 2022, we entered into a manufacturing agreement which has allowed us to begin providing NeuroCap™ for broader sale in December 2022. Our strategy is to expand to indirect sales through representatives and distributors.

~~● Traumatic Head Injury (sports and non-sports related)~~NeuroEEG™

●The NeuroEEG™ ~~Sleep~~connects ~~Disorders~~wirelessly ~~(e.g.~~to ~~Insomnia~~the computer, ~~Restless~~allowing ~~Leg~~freedom ~~Syndrome~~of movement for the patient and enabling telemedicine applications. Currently, ~~Narcolepsy)~~we believe a shortage of EEG testing equipment and technicians exists in some areas. Other technology may require a specialized technician to apply the gel and electrodes individually. A neurology technician may be more expensive and in shorter supply. They may not be staffed and available 24/7 for some hospitals.

●NeuroCap™ and ~~Epilepsy~~NeuroEEG™ can be used for recording EEGs in neurology clinics, urban and rural ED’s, ICU’s, urgent care clinics, nursing homes and assisted living facilities, sports facilities, remote clinical research studies and a variety of other settings.

The EEG may also be used to determine the electrical activity of the brain of an individual involved in a trauma or experiencing addiction, as well as the brain activity of comatose individuals.

It is here in the advancement of technology where we believe our products and technology will play a key role in the use and development of EEG related activities.

Neurology: Our Products, Services and Product Roadmap

Our data acquisition platform is composed of three main parts:

1. Hardware - NeuroEEG™ and NeuroCap™, our two products on the market.

2. Software - professional software for registering and analyzing EEG data.

3. NeuroNet Cloud - The database where brain data can be stored and analyzed.

NeuroEEG

NeuroEEG™ is an FDA cleared 16-channel, clinical-grade device, intended for prescription use to acquire, record, transmit, and display electrical brain activity for patients of all ages. portable, versatile, and compact and can easily be deployed across any number of different patient settings. Easy setup on NeuroEEG™ lets clinical staff of any level set up and run the EEG test under the supervision of a physician. Its wireless system digitizes and records electrophysiological activity at 500Hz and is further supported by advanced artifact filtering allowing for the cleanest signal possible. The intuitive nature of the device democratizes EEG as a viable diagnostic tool that can be implemented across environments that were formerly inaccessible through traditional EEG solutions. NeuroEEG™ is designed for use in hospitals, private practices, mobile (ambulatory care & emergency medical service vehicles), field applications (clinical trials), and athletic environments.

~~NeuroEEG™~~We isreceived ~~non-invasive~~our ~~and~~CE iscertification ~~intended~~in toAugust ~~acquire~~2022, ~~display~~which ~~and~~will ~~store~~certify ~~the~~that ~~electrical~~our ~~activity~~NeuroCap™ ofmeets aall ~~patient’s~~sales ~~brain~~requirements onin athe ~~computer (PC or~~European ~~laptop).~~Union ~~The generated data serves as a clinical assessment aid within a clinical practice, rehabilitation institution, diagnostic center, neurosurgical clinic, operating room, intensive care unit,~~ and ~~emergency~~European-Economic ~~room~~Area ~~environment~~countries. Data acquired by NeuroEEG™ is to be performed under the direction and interpretation of a licensed medical professional. This device does not provide any diagnostic conclusion about a subject's condition. The NeuroEEG is designed to be used with our NeuroCap Product.

~~NeuroCap~~NeuroHub™

~~The NeuroCap~~NeuroHub™, fka isNeuroNet anCloud, ~~FDA~~is ~~cleared~~being ~~disposable,~~developed ~~soft~~to ~~layered~~collect ~~cap~~and ~~with~~aggregate andata ~~integrated~~from ~~electrode~~current ~~circuit~~and ~~that~~future isCompany ~~designed~~devices tolike ~~address~~the ~~existing~~NeuroCap™ ~~problems~~and ofNeuroEEG™ ~~conventional~~and ~~EEG~~from ~~systems.~~external ~~The~~sources ~~silver~~such ~~embedded~~as ~~wiring~~research isand ~~pre-gelled,~~medical sodata itbanks, ~~requires~~3rd-party nodevices, ~~prepping~~and ofclinical-use ~~the~~applications. We ~~skin~~believe ~~before~~that ~~application. NeuroCap~~NeuroHub™ ~~makes~~will itallow ~~possible~~ for ~~medical~~comprehensive ~~staff~~monitoring ofand ~~all~~facilitate ~~levels~~collaborative todiagnosis, ~~perform~~analysis, ~~EEG~~research, ~~tests~~treatment, and ~~without~~prevention ~~having~~by toemploying ~~laboriously~~sophisticated ~~apply~~Artificial ~~electrodes one-by-one~~Intelligence or ~~spend~~AI ~~considerable~~and ~~time~~machine ~~cleaning~~learning anor ~~EEG~~ML ~~headset~~algorithms ~~after~~utilizing ~~each~~historical ~~use~~and current patient, device and platform data.

~~The~~We ~~NeuroCap™~~anticipate ~~works~~that ~~in parallel with the NeuroEEG~~NeuroHub™ ~~amplifier~~will ~~device~~allow white-labeling to ~~successfully~~provide ~~carry~~facilities, ~~out~~physicians, ~~EEG~~and ~~tests.~~patients ~~However,~~with ~~the~~a ~~NeuroCap™~~HIPAA-compliant branded ~~can~~portal ~~also~~for ~~work~~Tele-neurology/Tele-medicine ~~with~~services, ~~other~~enabling ~~EEG~~secure ~~devices~~access ~~and~~to ~~not~~patient ~~just~~data ~~our~~for ~~NeuroEEG.~~evaluation ~~NeuroCap’s~~and ~~electrode~~assessment ~~placement~~by ~~follows~~internal ~~standard alignment pursuant~~and toexternal ~~the~~clinical ~~international~~specialists ~~10-20~~and ~~system~~neurologists. The ~~acquisition~~platform ofwill ~~electrical~~also ~~brain~~integrate ~~activity~~with isElectronic ~~carried~~Medical ~~out~~Records byor ~~non-invasive~~EMRs ~~pre-gelled~~and ~~passive~~other ~~Ag/AgCl~~external ~~scalp~~medical ~~(cutaneous)~~record ~~electrodes,~~databases ~~ensuring~~to ~~maximum~~ensure ~~comfortability~~up-to-date ~~for~~and ~~the~~complete ~~wearer.~~access ~~Benefits~~to ofpatient ~~NeuroCap™ include:~~information.

●We anticipate ~~The~~that ~~NeuroCap~~NeuroHub™ ~~has~~will 22allow ~~electrodes~~users to access patient and 19clinical ~~active~~data ~~EEG~~to ~~channels~~evaluate patient conditions remotely. We believe that such an infrastructure removes the need for ~~performing~~direct ~~high-quality~~contact ~~routine~~with ~~EEG~~the ~~tests~~patient, opening up underserved geographic locations with an undersupply of physicians to meet the growing demand for neurological care as aging patient populations continue to grow.

●As designed, ~~NeuroCap™’s~~we ~~disposable~~anticipate ~~EEG~~that ~~headset~~NeuroHub™ ~~helps~~will ~~reduce~~allow ~~the~~for ~~risk~~cross-referencing multiple points of ~~contagions~~data ~~and~~to ~~cross-contamination.~~aid with the following:

● ~~NeuroCap™’s~~EEG ~~pre-gelled~~data ~~electrodes reduce patient discomfort~~ and ~~concern~~biomarker ~~over messy gels.~~analysis;

● ~~NeuroCap™’s~~Pharmacology ~~malleable structure and adjustable Velcro straps allows full adjustability during placement in patients with head injuries.~~studies;

● ~~NeuroCap™’s~~Neurological ~~easy~~disorders to(Seizure, ~~follow~~Sleep, ~~numbered~~Tumors, ~~straps~~Infection/ ~~makes~~Injury ~~application~~(TBI), ~~easy~~Dementia, ~~by healthcare workers of all skill levels. Set up can be accomplished in about 5 minutes. User-friendly and requires minimal training.~~Stroke);

● ~~NeuroCap™~~Structural ~~can~~Injury ~~stay~~Classifier on(SIC), ~~patient’s~~Brain ~~head~~Function ~~for~~Index up(BFI), toand 4Concussion ~~hours.~~Index (CI);

● ~~NeuroCap™~~Neurocognitive isAssessments ~~reimbursable.~~(Attention, behavioral, developmental); and

● ~~NeuroCap™~~Neurofeedback ~~can~~analysis beand ~~used~~Neurofeedback ~~overnight~~Training ~~when no techs are available, or with COVID patients to limit exposure time~~(NFT)

Initial sales of NeuroCap™ have been made to a small number of hospitals and clinics. After completion of the merger, operations were transferred to Lakewood Ranch, Florida. In 2022, a manufacturing agreement was entered into. The Company is moving and new distribution agreements were entered into to start selling the NeuroCap™ within the United States and internationally.

NeuroNet Cloud

Our NeuroNet Cloud infrastructure is being designed to provide for a robust platform to store and manage all forms of data that may be received from internal and external entities such as Electronic Health Records(“EHRs”), Electronic Medical Records (“EMRs”), Internet of Things (“IoT “) devices and 3rd party apps, clinical applications and other forms of patient data. The NeuroNet Cloud is also being designed to provide for streamlined connectivity, allowing secure access to patient data for purposes of evaluation and reporting by outside clinical specialists, such as neurologists.

We are also developing a HIPAA-compliant data storage and patient management cloud infrastructure to provide teleneurology services. The infrastructure is being designed so neurologists will be able to remotely access patient EEG and clinical data to evaluate patient conditions. We believe that such an infrastructure removes the need for direct contact with the patient, opening up underserved geographic locations with an undersupply of physicians to meet growing demand for neurological care as aging patient populations continues to grow. Data will be acquired via the 22 channel NeuroCap™ and will be wirelessly transmitted to the cloud, via the NeuroEEG™, as batch data (fully transferred before being consumed) or in real-time (data is consumed as it is being produced).Data can then be consumed by a doctor or specialist who can recover the data, replay, and provide feedback, such as a report, on the selected patient data. This infrastructure is configurable to match unique workflows of healthcare operators.

As designed, the NeuroNet Cloud would then be able to cross-reference multiple points-of-data including:

● Medical Images

● Lab Results

● Genetic testing

● Behavior data

● Sensor data

● Electronic Health Records

● 3rd party applications

We expect to have a fully working model of the NeuroNet Cloud by the end of 2023, subject to the availability of funds.

Artificial Intelligence Infrastructure

Our infrastructure is also being designed to gather and mine brain-imaging data. Clinicians and researchers will be able to access data profiles of their patients and generate risk assessment and treatment plans to address neurological conditions. This data could also be useful in establishing correlations between a myriad of brain scans, allowing us to further understand connections about the brain that have not been discovered.

Artificial intelligence infrastructure in the Company cloud refers to all modules used to perform automatic analysis of patient data. This infrastructure can receive inputs from many different sources such as medical databases, normative data sets, and other patient health information. By using machine-learning algorithms, the system is being designed to improve accuracy, providing for more advanced diagnostics as additional brain images are acquired.

The infrastructure is being designed to combine neural networks with state-of-the-art tree search and pattern classification systems to build robust neurological health profiles of patient brain scans. These models are expected to be self-learning, so the more data supplied to it, tothe more “educated” it is expected to be.

WeOur ~~believe~~objective weis ~~will~~to achieve better patient outcomes at a reduced cost through robust modelling and correlational analysis of brain imaging and other biometric data. Significant patterns recognized by the system are designed to help medical professionals detect nuances in an individual’s brain, allowing them to tailor more personalized treatment plans for their patients. ~~The~~NeuroHub ~~NeuroNet Cloud~~ is being designed to handle millions of brain images to create robust models that correlate health records, behaviors, and other neurological factors.

~~Neurology:~~NeuroHub™ ~~Intellectual~~remains ~~Property~~in development and is not currently integrated into our NeuroCap™ or NeuroEEG™.

Protection of our intellectual property is a strategic priority for our business. We rely on a combination of patents, trademarks, copyrights, trade secrets as well as nondisclosure and assignment of invention agreements, confidentiality agreements and other measures to protect our intellectual property and other proprietary rights.4

5Market Overview

~~Patents and trademarks are~~We ~~significant~~compete towithin ~~our business to~~ the ~~extent~~domestic ~~that a Product or an attribute of a Product represents a unique design or process. Patent protection restricts competitors from duplicating unique designs~~ and ~~features.~~global Tomedical ~~protect~~device ~~our proprietary secrets and competitive technologies~~industry, we ~~have~~referred ~~obtained and are seeking~~ to ~~further~~as ~~obtain patent, trade secret, trademark and other intellectual property protection on our Products whenever appropriate. As of~~ the ~~date of this Annual Report on Form 10-K, the Company has applied for one U.S. nonprovisional patent titled~~ “~~Apparatus And Method For Conducting Electroencephalography~~MedTech” ~~(Application No.: 15/898~~industry,~~611),~~ ~~one~~which ~~Chinese patent titled “Apparatus and Method for Conducting Electroencephalography” (Application No.: 201880002338.7)~~industry, ~~and one European patent~~on ~~titled~~a ~~“Apparatus~~global ~~And Method For Conducting Electroencephalography” (Application No.: 18757492.6)~~scale, ~~all~~is ofexpected ~~which relate~~ to ~~our~~ ~~NeuroCap.~~reach ~~All~~an ~~such~~estimated ~~applications~~$594.5 ~~are~~billion ~~pending~~by ~~and~~2024, ifand ~~granted,~~it ~~would~~is ~~expire~~forecast into ~~2037.~~grow Weat ~~have~~a ~~also~~compound ~~applied~~annual ~~for~~growth ~~one provisional U.S.~~rate ~~patent~~or ~~application~~CAGR ~~titled “Full Head Apparatus and Electrodes for Conducting Electroencephalography” (Application No.: 63/115,810) in the name~~ of ~~Brain Scientific, Inc~~5.;3% ~~and~~from ~~one~~2020 ~~provisional~~to ~~U.S. patent application titled “Integrated Brain Machine Interface Platform with Graphene Based Electrodes” (Application No.: 63/070~~2024,~~749)~~ inaccording ~~the~~to ~~name of Memory MD, Inc~~Statista.

We also own two registered trademarks (Neuro EEG and NeuroCap) and have pending applications for two additional trademark registrations (Brain Scientific and Memory MD). In May 2018, we entered into a Patent Assignment and License Back Agreement with Boris Goldstein, our Chairman, Secretary and Executive Vice President, Dmitriy Prilutskiy, Stanislav Zabodaev and Medical Computer Systems Ltd. Pursuant to the agreement, among other things, Messrs. Goldstein, Prilutskiy and Zabodaev assigned all of their rights to a patent entitled “Apparatus And Method For Conducting Electroencephalography” (Application No.: 15/898,611), to us, and in return, we granted to Medical Computer Systems Ltd., an unaffiliated entity who also provides manufacturing services to us, a limited, royalty-free, fully paid-up, worldwide, nonexclusive license (without the right to sublicense or assign), to the patent, to practice, make and use the inventions, ideas and information embodied therein, and to make, use, offer to sell, sell, lease or import products, services, processes, methods and materials embodying or deriving from the inventions, ideas and information from the patent and any activities derived directly therefrom; provided, however, that if and upon FDA approval of a Product, Medical Computer Systems’ aforementioned rights shall be limited to manufacturing and sales solely to us or on our behalf provided that we purchase from Medical Computer Systems (and Medical Computer Systems makes available for sale) a minimum of 20,000 units of Products per calendar year on reasonable terms and conditions to be determined by the parties in good faith; and provided further, however, that Medical Computer Systems can without any limitation sell products embodying or deriving from the inventions, ideas and information from the patent in (i) the territories that made up the former USSR (excluding the Baltic countries) and (ii) Japan. In furtherance of the foregoing first proviso, in the event we fail to purchase the annual minimum order for a particular calendar year, Medical Computer Systems’ limitation to manufacture and sell Products only to us pursuant to this proviso will be suspended for the next calendar year.

Neurology: Market Overview

We compete within the domestic and global medical device industry, referred to as the “MedTech” industry, which industry, on a global scale, is expected to reach an estimated $594.5 billion by 2024, and it is forecast to grow at a compound annual growth rate (“CAGR”) of 5.3% from 2020 to 2024, according to Statistsa.

The MedTech industry is characterized by rapid change resulting from technological advances and scientific discoveries. We believe that U.S. medical device companies are highly regarded on a global scale for their innovations and high-technology products, which innovations and products are produced due to a significant investment in research and development.

~~The~~Between ~~global~~both ~~EEG~~of ~~system~~our ~~and~~product ~~device~~lines, ~~market~~Neurology isProducts ~~expected~~and toMotion ~~reach $1.59 billion by 2026~~Products, ~~growing~~there atis a ~~CAGR~~significant ofopportunity 8for growth.7% ~~during~~The ~~the~~primary ~~forecast period~~market ~~according~~for toour ~~Grand~~Motion ~~View~~Products ~~Research.~~is Wewithin ~~believe~~MedTech. ~~the increasing incidence and prevalence of neurological disorders~~However, ~~rising~~they ~~awareness~~can ~~about neurodegenerative~~be ~~disorders,~~used ~~high~~in ~~incidence~~multiple ofother ~~epilepsy,~~businesses ~~sleeping~~including ~~disorders~~drones, ~~Parkinson’s~~robotics, and ~~the~~automotive industries. ~~increasing~~As ~~applications~~we ofcontinue ~~brain monitoring~~to inexpand, ~~clinical~~based ~~trials~~upon ~~are driving~~ the ~~growth~~availability of ~~this~~funds ~~market.~~to Indo ~~2018~~so, ~~standalone~~we ~~devices~~anticipate ~~were~~pursuing ~~estimated~~these toadditional ~~generate the most revenue as they gained adoption in hospitals and specialized centers~~markets. ~~These customers make our primary target market for our neurology devices.~~

The ~~United~~global ~~States~~EEG ~~had~~system ~~the~~and ~~highest~~device ~~revenue~~market ~~share~~is expected to reach $1.59 billion by 2026, growing at a CAGR of ~~the~~8.7% ~~EEG~~during ~~system/device~~the ~~market~~forecast period according to Grand View Research. ItWe isbelieve ~~our~~the ~~plan~~increasing toincidence ~~target~~and prevalence of neurological disorders, rising awareness about ~~the~~neurodegenerative USdisorders, ~~market~~high ~~primarily~~incidence of epilepsy, ~~though~~sleeping wedisorders, ~~are~~Parkinson’s, ~~pursuing~~and ~~sales~~the ~~globally~~increasing ~~through~~applications ~~our~~of ~~master~~brain monitoring ~~agent~~in ~~LOK~~clinical ~~Corporation~~trials asare ~~well~~driving the growth of this market. ~~Statista~~In ~~estimates~~2018, standalone devices were estimated to generate the most ~~U.S.~~revenue ~~EEG~~as ~~market~~they ~~size~~gained atadoption ~~$355M~~ in ~~2024,~~hospitals ~~growing~~and atspecialized ~~a 5~~centers.6% ~~CAGR~~These ~~over~~customers are the ~~forecast~~primary ~~period~~target market for our neurology devices.

The U.S. had the highest revenue share of the EEG system/device market according to Grand View Research. It is our plan to target the US market primarily, though we are pursuing sales globally through our master agent LOK Corporation as well. Statista estimates the U.S. EEG market size at $355M in 2024, growing at a 5.6% CAGR over the forecast period.

Brain monitoring is a complex process, requiring expensive and advanced devices and equipment that are mainly found only in hospitals. Hospitals also see a considerably larger inflow of patients as compared to small clinics and other end users. Additionally, brain monitoring devices can pose a considerable burden in terms of maintenance expenses on healthcare facilities; we believe that in general hospitals, more than other end users, are able to bear such costs. Hence, brain monitoring devices are mostly used in hospitals, which consequently account for the largest market share.

U.S. Healthcare Market

The National Health Expenditure Accounts (or NHEA) are the official estimates of total health care spending in the ~~United States~~U.S. U.S. health care spending grew 9.7 percent in 2020, reaching $4.1 trillion or $12,530 per person. As a share of the nation'’s Gross Domestic Product, ~~health~~ health spending accounted for 19.7%.

Digital health innovations are driving growth and opportunity in three major verticals of healthcare:

●

Remote Patient Monitoring. Devices and applications that allow care providers to keep tabs on chronically ill, recently released, and overall “high-risk” patients (also referred to as remote patient management, or RPM). Wearable patches that diagnose heart conditions, sensors that monitor asthma medication intake, and glucose monitors that send diabetics’ data straight to their smartphones are just a few examples.

● Telehealth. Doctor access and ~~advice~~advise, from outside the confines of an office visit. It could be mental health counselling from across the country, diagnosis and prescription writing in pediatrics without taking a sick child to the office, alternatives to primary care physician visits, and other, similar events.

●

Behavior Modification. Platforms that help patients change their habits and adopt healthier lifestyles, with the primary aim of preventing illness and a clinically validated methodology of doing so. That includes smoking cessation tools and diabetes prevention through digital weight loss and coaching, among other technologies.

Neurology Reimbursement

Coverage in the U.S.

Reimbursement from private third-party healthcare payors and, to a lesser extent, Medicare will be an important element of our success. Although the Centers for Medicare and Medicaid, or CMS, and third-party payors have adopted coverage policies for our targeted indications, there is no guarantee this will continue at the same levels or at all in the future.

The International Classification of Diseases, Tenth Edition, or ICD-10 is a clinical cataloging system that went into effect for the U.S. healthcare industry on October 1, 2015, after a series of lengthy delays. Accounting for modern advances in clinical treatment and medical devices, ICD-10 codes offer many more classification options compared to those found in its predecessor, ICD-9. Within the healthcare industry, providers, coders, IT professionals, insurance carriers, government agencies and others use ICD codes to properly note diseases on health records, to track epidemiological trends and to assist in medical reimbursement decisions.

We believe that many of the indications we are pursuing with our technologies are currently reimbursed on a widespread basis by Medicare, Medicaid, and private insurance companies.

Coverage Outside the U.S.

If we seek to commercialize our products in countries outside the U.S., coverage may be available from certain governmental authorities, private health insurance plans, and labor unions. Coverage systems in international markets vary significantly by country and, within some countries, by region. If we seek to commercialize our technology, if approved, outside the U.S., coverage approvals must be obtained on a country-by-country, region-by-region or, in some instances, a case-by case basis. Based on our ongoing evaluation, certain countries reimburse more highly than others.

Athletic Performance Market

Athletic performance encompasses the treatment and prevention of injuries related to athletics and exercise. Our business plan includes positioning our products and services as a go-to-choice in diagnostic tools for brain-related sports injuries. The EEG with cortical brain maps is highly capable of identifying post-concussion syndrome. Concussions and traumatic brain injuries caused by contact sports are a growing and significant issue among athletes. The Center for Disease Control and Prevention has reported that 1.6 million to 3.8 million concussions occur each year, and UPMC Sports Medicine estimates 5 in 10 concussions go unreported or undetected with 2 in 10 high school athletes who play contact sports getting a concussion in a given year.

~~The~~Other growth of this market can be attributed to increased participation in athletic activities, thus leading to an increased risk of injuries. Also, government support for participation in athletics to combat high obesity rates is expected to boost participation in athletics.Markets

Our business plan includes positioning our products and services as a go-to -choice in diagnostic tools for brain-related sports injuries. The EEG with cortical brain maps is highly capable of identifying post-concussion syndrome. Concussions and traumatic brain injuries caused by contact sports are a growing widespread issue among athletes. The Center for Disease Control and Prevention has reported that 1.6 million to 3.8 million concussions occur each year, and UPMC Sports Medicine estimates 5 in 10 concussions go unreported or undetected with 2 in 10 high school athletes who play contact sports getting a concussion in a given year.

~~If left~~● ~~undetected,~~Education ~~concussions~~Enhancement: ~~can~~Analysis ~~lead~~of toEEGs ~~long-term brain damage and~~ may ~~even~~ be ~~fatal.~~useful ~~Without~~in ~~professional~~recognizing ~~doctors~~cognitive todifferences. ~~survey~~The ~~the~~brain ~~true damage~~scans of ~~the~~potential ~~head~~customers ~~impact,~~in ~~athletes~~this ~~often~~space ~~ignore~~can ~~head~~be ~~impacts~~a ~~and~~steppingstone ~~later~~for ~~suffer~~further ~~from the consequences~~research. ~~Since~~The angoal ~~estimated 90%~~ of ~~diagnosed concussions~~selling ~~do not include a loss of consciousness according~~ to ~~NIH,~~the ~~many~~education ~~head~~market ~~impact injuries are dismissed. To prevent these outcomes, it~~ is ~~critical~~to ~~that~~have ~~coaches and players are aware of~~ the ~~dangers~~opportunity ~~of contact sports and are able~~ to ~~conduct~~measure abaseline ~~proper~~EEGs ~~concussion evaluation. The growing number~~ of ~~sports related brain injuries suggests that there is an unmet demand for a quick assessment and delivery of brain damage, which we believe our products and services can provide~~students.

~~Education Enhancement~~● Clinical Trials: Clinical trials assess the safety and efficacy of a new drug, therapy, surgical procedure, medical device, or other intervention and are essential tools in conducting research. When used in clinical trials, we expect our products and services will give a fast and accurate analysis that may speed up the clinical trial process. Moreover, clinical imaging is the technique and process of capturing images of the human body for clinical purposes to reveal, diagnose or examine diseases.

Global education and training expenditures are estimated to reach approximately $10 trillion by 2030 according to HolonIQ, as population growth and technology in developing markets is expected to fuel a massive expansion in education, and training.6

~~The~~Market growth in the market is due to an increase in the attendance of students, the promotion of online learning, a rise in tuition costs, an escalation of graduation rates, and an expansion of scientific research. Parents are willing to spend on education for their children and government-initiated awareness programs promote the importance of education. The US is one of the most efficient, and therefore desired, destinations for educational purposes. In the United States, higher growth opportunity and better career prospects reinforce the need for education and research.Dynamics

Since analysis of EEGs are useful in recognizing cognitive differences, the brain scans of potential customers in this space can be a steppingstone for further research. Furthermore, the cognitive measurements of EEGs are useful in assessing the effectiveness of an educational program. Conclusions drawn from the analysis can then be further applied in the classroom in the future. The goal of selling to the education market is to have the opportunity to measure baseline EEGs of students. The baseline EEGs can serve in multiple studies, including those that evaluate the best methods of teaching and learning in the classroom. Some additional uses of EEGs within the education market include research and analysis into the brain images of students with learning disabilities.

Clinical Trials

The global healthcare Contract Research Organization (CRO) market size is expected to reach over $61.6 billion by 2027, registering a CAGR of over 6.6% over the same period, primarily resulting from the increasing cost of drug development, according to FutureWise Research. Rising cost of clinical trials and challenges pertaining to patient recruitment have led biopharmaceutical companies to turn to regions like Central and Eastern Europe, Asia Pacific, Latin America, and Middle East for cost savings and quick patient recruitment.

Clinical trials assess the safety and efficacy of a new drug, therapy, surgical procedure, medical device, or other intervention and are essential tools in conducting research. When used in clinical trials, we expect our products and services will give a fast and accurate analysis that may speed the clinical trial process. Moreover, clinical imaging is the technique and process of capturing images of the human body for clinical purposes to reveal, diagnose or examine diseases. Our EEG is a clinical imaging tool that can acquire millions of clinical images stored on a cloud infrastructure. A vast number of clinical images can assist in revealing, diagnosing, and examining neurological conditions.

The Global Telemedicine Market/Industry

In addition to the MedTech industry, we are also seeking to participate within the rapidly expanding global telemedicine industry/market. This industry focuses on the delivery of healthcare services, consultations and advice to patients wherever they are through the means of technology, software mediated video and data portals. We believe that there is and will continue to be significant demand for such services given the need to match physicians with patients in remote areas or without having patients travel long distances to access the care they need. We also believe that there is a major need within this industry to also provide point of care diagnostic, which we are seeking to develop as a niche, especially within neurology.

The global telemedicine market was estimated at USD 70.4 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 19.5% from 2022 to 2030.

Telemedicine has been extensively used during the COVID-19 pandemic as it aids in decreasing contact with healthcare facilities, healthcare staff, and patients, in order to minimalize the risk of COVID-19.

According to a report published by the Agency for Healthcare Research and Quality (AHRQ), the implementation of telehealth or telemedicine solutions improves care delivery to patients.

Factor such as, rising emergency medical incidents and ageing world population are anticipated to drive such growth. North America is anticipated to account for a significant portion of market share, and the U.S. is expected to be the largest telemedicine market in North America over this period. The Europe telemedicine market is also expected to grow substantially, due to factors such as rising cost of healthcare and rising prevalence of chronic diseases, while Asia-Pacific is projected to record the fastest growth over such period.

Neurology: Market Dynamics

Driver: Growing incidence of traumatic brain injuries

A traumatic brain injury or TBI is non-degenerative, non-congenital damage to the brain from an external mechanical force, possibly leading to permanent or temporary impairment. TBI is a major public health concern. According to the Journal of Neurosurgery, TBI is a leading cause of morbidity and mortality, with approximately 69 million people suffering TBI annually worldwide. Estimated incidence is highest in regions with good data such as North America and Europe, indicating that better testing would likely uncover a higher global TBI incidence.

8Opportunity: Increasing and expanding therapeutic applications of brain monitoring devices

TBI, if ignored, can lead to permanent disabilities or death. Close monitoring and immediate therapy for related abnormalities are crucial to reducing the rate of mortality or morbidity associated with TBIs. As intercranial pressure monitoring or ICP is the most common cause of death in patients with severe TBI, ICP monitoring is considered as the standard of care. The growing incidence of TBIs is, therefore, likely to support market growth.

Opportunity: Increasing Expanding therapeutic applications of brain monitoring devices

Apart from applications in neurological disorders, neurodegenerative diseases, and psychiatric disorders, brain monitoring devices are also used in other therapeutic areas like insomnia, post-traumatic stress disorder or PTSD, and sleep apnea. Quantitative EEG analysis is widely used to investigate the neurophysiological characteristics of insomnia. EEG biofeedback is a training process that has been scientifically proven to aid in the management of PTSD.

A number of research studies have demonstrated the effectiveness of neurofeedback for PTSD in adults. For instance, a research study published by the NCBI, or National Center for Biotechnology Information, in 2016 demonstrated that 24 sessions of neurofeedback significantly reduced PTSD symptoms in adult sample populations. Similar studies are also being conducted in children. Such positive research outcomes suggest that neurofeedback is a promising approach in the treatment of PTSD. This is especially important because existing treatments can be quite difficult to tolerate and have limited effectiveness for many individuals with PTSD. In addition, EEG is routinely used to measure and record brain wave activity for the diagnosis and treatment of sleep apnea. These extended applications of brain monitoring devices are expected to provide growth opportunities for players operating in this market.

Challenge: Shortage of trained professionals

Trained medical personnel are required to effectively operate devices involved in the complex process of brain monitoring. The positioning of electrodes on the scalp and the insertion of muscular needles require accuracy and can be performed only by highly trained personnel. In addition, the results generated by brain monitoring machines are complex and can only be interpreted by qualified technicians or skilled professionals. Without these fundamental skills, end users will face difficulties in maximizing the utility of their brain monitoring equipment. The presence of highly skilled medical personnel and staff is, therefore, vital for the effective use of brain monitoring equipment.

Currently, there is a shortage of skilled medical personnel in both developed and developing countries. ItThe ~~has~~AAMC, ~~been~~or ~~estimated~~Association of American Medical Colleges, estimates that the ~~United~~U.S. ~~States~~ will see a shortage of up to nearly 122,000 physicians by 2032 as demand for physicians continues to grow faster than supply, Furthermore, according to the American Association of Colleges of Nursing, there is a projected shortage of registered nurses in the US, and it is expected to intensify by 2030. Moreover, the shortage of trained and experienced neurodiagnostic technologists globally has compelled hospitals to cross-train other allied health professionals to perform neurodiagnostic examinations. This presents a key challenge for the growth of the global brain monitoring devices market.

WeMarket believe the market remains fragmented as many medical practices rely on dated technology and complicated brain monitoring solutions. We also believe that the overpricing and technological barriers currently existing in the market make our innovative EEG platform truly disruptive by being both user friendly and cost effective.Application

~~Neurology:~~For ~~Competition~~neurologists and other health providers, we aim to provide a solution for monitoring patient health and safety across a variety of locations including the hospital, specialized clinics, and home settings. In managing patients with epilepsy, providers can improve in areas concerning patient re-admittance, patient mortality and morbidity. Providers can also proactivity prevent the onset of negative chronic health conditions by engaging with at-risk populations at a fraction of the cost by implementing our affordable EEG solutions.

~~Our~~For ~~Products~~health ~~face~~providers, aour ~~mixture~~offering of ~~competitors~~an ~~ranging~~EEG ~~from~~monitoring ~~large~~solution ~~manufacturers~~could ~~with~~ease ~~multiple~~data ~~business~~collection ~~lines~~efforts. toBy ~~small~~providing ~~manufacturers~~an ~~offering a~~accurate ~~limited selection of products~~ and ~~services.~~consistent stream ~~Many~~ of ~~the~~EEG ~~competitors~~data, ~~whom~~our weproducts ~~directly~~and ~~compete~~services ~~with~~are ~~include~~being ~~companies~~designed ~~who develop or intend~~ to ~~develop~~allow ~~medical~~physicians ~~EEG~~and ~~products~~other ~~with~~health ~~FDA~~professionals ~~clearance~~ to ~~support~~make ~~clinical~~use ~~diagnosis~~ of ~~brain~~newly available ~~disorders.~~bio-metric ~~Our~~data ~~indirect~~to ~~competitors offer~~improve ~~similar~~diagnosis, ~~products~~treatment, and ~~services,~~management ~~but~~of ~~target~~various ~~audiences~~neurological ~~in the clinical research and consumer solutions markets~~illnesses, aseffectively ~~opposed~~increasing to the ~~medical~~quality ~~solution~~and ~~market~~value ~~that~~add ~~we target. These indirect competitors are largely focused on the development~~ of ~~EEG~~medical ~~products for research, consumer, and athletic application~~services.

~~Major~~Our ~~shifts~~portability ~~in industry market share have occurred in connection with product problems, physician advisories, safety alerts,~~ and ~~publications about~~integration ~~MedTech~~potential ~~products,~~augment ~~reflecting~~ the ~~importance~~existing ofsuite ~~product quality, product efficacy, and quality systems in the medical device industry. In addition, in the current environment~~ of ~~managed~~remote ~~care,~~monitoring ~~economically motivated customers~~solutions, ~~consolidation~~allowing ~~among~~physicians ~~health care providers, increased competition, and declining reimbursement rates, we anticipate an increasing need~~ to ~~compete on the basis of price and quality.~~differentiate Inbetween ~~order~~nuanced toneurological ~~continue~~conditions tohappening ~~compete~~more ~~effectively,~~accurately wewithin ~~must continue to create or acquire advanced technology, incorporate this technology into our current~~ and ~~future~~outside ~~proprietary~~the ~~Products,~~hospital ~~obtain regulatory approvals in a timely manner, maintain high-quality manufacturing processes, and successfully market these Products~~setting. ~~Some~~An ofexample ~~these~~includes ~~initiatives include, but are not limited to, creating integrated cloud solutions~~helping ~~that~~neurologist’s ~~connect~~contrast ~~specialists~~nocturnal ~~with~~epilepsy ~~generalists~~patterns ~~for~~across ~~simple~~other ~~data~~sleep ~~transfer~~disorders ~~and analysis, streamlining clinical diagnoses with new medical devices, and opening revenue streams from secondary healthcare markets,~~ such as ~~primary~~parasomnia ~~care~~where ~~medical~~individuals ~~professionals~~engage ~~who utilize EEG analyses~~ in ~~their~~abnormal ~~practices~~movements during sleep.

Motion Products

Piezo Motion is a provider of piezo motor technology with significant investment in research and development of affordable piezoelectric motors to meet, and exceed, the needs of today’s global markets. We are committed to the development of innovative piezoelectric technology and motion products that enhance their functionality in a multitude of applications. We work with startups, OEMs, research institutions and industrial companies from around the world empowering the visionaries behind their products.

Piezo Motion’s piezoelectric motors are currently divided into two main series (the Blue Series and the Imperial Series) based on design and construction methodology.

Blue Series

LCS

RBS

LAS

RAS

Imperial Series

PM-22R

LPM-50

Piezo Motion completed an extensive engineering program culminating in the development and initial launch of a unique line of small rotary and linear piezo motor products hereinafter referred to as the Blue Series, control electronics and associated software. Piezo Motion’s motor product line utilizes engineering polymers making them suitable for equipment and for high volume OEM applications. While there are several types of piezo motors on the market, the design and technology employed by Piezo Motion is new and combines what we perceive to be key advantages, such as superior precision and power density with affordability and ease-of-manufacture.

Piezo Motion’s Blue Series piezo motors are available in a variety of sizes and configurations and are divided into twelve core motor platforms which include rotary motors (Models RBS, RAS) and linear motors (Models LCS, LBS and LAS). These core motor models differ in output specification and are further divided into variants/versions which include versions having hollow-shaft and solid-shaft rotors, versions having integrated magnetic and/or optical encoders and versions which are non-magnetic and suitable for use within medical MRI. For each motor product line Piezo Motion has developed hardware control electronics together with motion control software including firmware and operating software.

The second series of motors available is the Imperial Series which employs a unique piezoelectric drive system, in which a ring-shaped piezo resonator with a peripheral vibration shell is directly coupled to an array of radially positioned stainless-steel pushers. This unique rotary motor design enables a substantial increase in the coupling efficiency between the stator and the rotor, which increases overall motor efficiency and provides superior resolution and torque. The Imperial Series includes powerful motors capable of extremely faster response times, coupled with submicron-level angular steps and exceptional torque. The range includes both bidirectional (reversible) and unidirectional PCB-mounted piezo motor models, like the Blue Series.

We believe that the piezoelectric motors of the Blue Series are unique because they combine the key performance benefits of a piezo motor with the price point of traditional precision direct current or DC motors. The Blue Series motor utilizes engineering polymers, making them very lightweight and suitable for equipment and high-volume OEM applications. Unlike the classic DC motor (e.g., BLDC and stepper motors), the versatile design employed by the Blue Series enables rotary and linear piezo motors consisting of very few parts, enabling economical manufacturing volume yielding a stable and reliable final result. Piezo technology is inherently non-magnetic which enables motor designs for specialized applications where traditional DC motors cannot be used. Piezo motors are also immune from electromagnetic or EM and radio frequency or RF interference and generate no emissions which can aid original equipment manufacturer or OEM product compliance and reduce or eliminate shielding costs.

We also believe that the Piezo-electric motors of the Imperial Series are unique because they provide the highest level of precision performance within a robust metal enclosure. Imperial Series motors are rotary and available in both reversible and non-reversible designs. These motors offer a much higher range of torque outputs compared to the Blue Series and provide higher precision for the most demanding positioning applications. Like the Blue Series, the piezo technology employed is inherently non-magnetic which enables motor designs for specialized applications where traditional DC motors cannot be used. They are also immune from EM and RF interference and generate no emissions which can aid OEM product compliance and reduce or eliminate shielding costs.

We believe that our propriety piezo technology may be up to 1,000 times more precise and up to 100 times faster to respond than the DC competitors. A typical rotary stepper motor might be configured to make up to 200 – 500 steps in each rotation. By comparison, our Blue Series rotary motors provide over 600,000 steps per full rotation and our Imperial Series can achieve over 2.5 million steps per full rotation. These performance attributes provide smoother and more precise motion. Our technology is also extremely scalable, enabling manufacture of very compact motors with our smallest being the length and width of a thumbnail.

Piezo Motion’s target markets include industries such as:

●

Medical Technology (“MedTech”) – Medical devices, whether surgical robots, infusion MRI pumps, wearable drug dispensers, syringe pumps, or a number of other applications often require efficient, lightweight, and very precise motion. Our motors can be made to avoid electromagnetic interference, which traditional motors cannot though it is a requirement for MRI and some other MedTech applications. From precise brain incisions to being able to release a nanoliter of drug from a wearable dispenser, our motors bring the precision needed for MedTech products today and into the future.

●

Pharmaceutical – Interlinked to the Medical Technology industry, the pharmaceutical industry relies on precise testing and measurement of substances in order to provide patients and experiments with the correct dosage. Our motors’ smooth motion and high precision have applications in pharmaceutical testing, manufacture, and patient use, especially given the rising use of wearable drug dispensing and micro dosing.

●

Aerospace (including Drones) – Aerospace provides many applications for our small motion solutions. While our motors would not be ideal to power the blades flying a drone or aircraft, they are ideal for the small, precision movements used to control the cameras on drones (e.g., gimbals), internal movement such as valves for larger aircraft, and many other precise control and use-case related applications.

●

Industrial Automation – With industry trends towards automation and miniaturization, the need for precise movements with relation to robotic appendages, fluid control, and other fine movements will be a tailwind for our precision motion products. Increased industrial automation also implies increased use of small sensor equipment, including optical and laser sensors, for which our motor’s compact size, efficiency, and precision are ideal.

●

Autonomous Vehicles – Similar to industrial automation, autonomous vehicles require many small sensors, cameras, and other equipment that often requires precision motion. Our motors, which can be as small as a human thumbnail, are well-placed for such applications.

●

Laser and Photonics – We have active customers in the laser and photonics space, where a micro-scale linear or angular movement can create a significant change to a beam’s path. From controlling the directionality of lasers themselves to adjusting mirrors and lenses used alongside them, our motors can provide the precision and smooth motion that may be able to help this industry move forward.

~~The~~Precision ~~medical~~Motion ~~device companies who we deem as competitors include the following, along with a description of their business based on publicly available information:~~Market

●We compete ~~Cadwell~~within ~~Industries~~the ~~Inc~~domestic and global precision micro motor and piezoelectric motor industries which combined are expected to grow at a CAGR of 4.1% –from ~~Cadwell~~2021 isto 2026 to an ~~international~~estimated ~~medical~~$34.3B ~~device~~by ~~company~~2026. The precision motion market is defined primarily by costly, high-precision piezoelectric motors and lower-end DC precision motors. These are the motors that ~~specializes~~guide inlasers, satellites, Mars rovers, and small cameras, among other things. This market continues to value more compact, precise, efficient motors to address the ~~manufacturing~~trends of ~~neurodiagnostic~~miniaturization and portability. ~~electrodiagnostic~~These ~~medical~~motors ~~equipment~~are used across many industries, including aerospace, robotics, manufacturing, drones, telecommunications, and ~~supplies~~the medical field. We believe that we are uniquely positioned with our patented technology to sell piezo precision at a price point that can compete with precision DC motors.

~~● Natus~~ Medical Technology Incorporated – Natus is a global market leader that provides diagnostic, therapeutic and surgical solutions built on a strong heritage in neurodiagnostics, neurocritical care and neurosurgery. Natus Neuro delivers clinician-led products that improve outcomes and enhance care for neuro patients through leading-edge equipment, service, education, and supplies. Natus Neuro’s comprehensive neurodiagnostic solutions enhance the diagnosis of neurological conditions such as epilepsy, sleep disorders and neuromuscular diseases.Market

●The primary ~~Nihon~~focus ~~Kohden~~for ~~Corporation~~our –piezoelectric ~~Nihon~~motors ~~Kohden~~remains ison athe ~~Tokyo-based~~medical ~~leading~~technology, ~~manufacturer~~or MedTech, ~~developer~~market. ~~and~~Use ~~distributor~~cases offor ~~medical~~precision ~~electronic~~motion products in this space vary from lab equipment, ~~which~~to ~~include~~surgical ~~EEGs,~~robotics ~~EMG~~to ~~measuring~~drug delivery systems, ~~ECGs~~to give a few examples. The MedTech industry is an optimal target because it increasingly requires higher precision than DC motors can offer, ~~patient~~low ~~monitors~~electromagnetic interference, and ~~clinical~~often an ~~information~~affordable ~~systems,~~price ~~with~~point ~~subsidiaries~~to inreduce ~~the~~system Ucosts.~~S.,~~ ~~Europe~~We ~~and~~believe ~~Asia~~that our products’ unique advantages will play well into this space.

~~● BioSerenity, Inc. – BioSerenity is an innovative medical technology company focused on Healthcare as a Service, the Internet of Medical Things or IoMT, A.I.~~ Markets and ~~real-world evidence in Neurology, Sleep Medicine, and Cardiology. BioSerenity provides remote diagnostic solutions to healthcare providers and patients in the US, Europe and the Caribbean.~~Customers

●Driver: Trends ~~Ceribell,~~toward ~~Inc.~~miniaturization ~~– Ceribell is headquartered in Mountain View, CA. Ceribell is focused on making EEG widely available, more efficient,~~ and ~~more cost-effective to improve the diagnosis and treatment of patients at risk for seizures.~~portability

●Creating increasingly ~~Zeto,~~small ~~Inc.~~and –mobile ~~Zeto~~devices isrequires anot ~~privately~~just ~~held~~smaller ~~medical technology company located in Santa Clara, CA focused on transforming the way electroencephalography or EEG is performed at hospitals~~ and ~~clinics.~~more ~~Zeto's~~energy-efficient ~~revolutionary~~motors ~~platform~~within ~~brings~~those ~~the~~devices ~~traditional~~but ~~EEG~~also ~~procedure~~more toprecise machinery ~~the 21st century. The company plans~~ to ~~leverage~~manufacture ~~its~~said hardware and software technology to improve noninvasive monitoring of brain's electrical activity and achieve better outcomes for neurological conditions such as epilepsy, sleep disorders, autism, stroke and concussiondevices.

●According to ~~Advanced~~Machine ~~Brain Monitoring~~Design, ~~Inc.~~the –need ~~Advanced~~for ~~Brain~~miniature ~~Monitoring~~motors is aitself ~~California-~~being ~~based~~expanded ~~private~~by ~~company~~trends ~~specializing~~towards inthe ~~developing~~invent ~~neurological~~of ~~medical~~collaborative ~~devices.~~robotic ~~The~~applications, robustness ~~company~~and ~~specializes~~extended inlife, ~~two~~safety ~~specific~~and ~~areas:~~analytics ~~neurotechnology~~through encoders and ~~sleep~~other ~~medicine.~~feedback ~~Advanced~~devices, ~~Brain~~and ~~Monitoring~~autonomy ~~primarily~~through ismulti-axis acontrol. Smaller ~~medical~~drones, ~~device~~smaller ~~and~~assembly ~~software~~lines, ~~company~~more ~~that~~complex ~~sells~~smartphones ~~its~~and ~~products~~cameras, toand ~~clinical~~more ~~trials~~precise ~~and~~robotics ~~pharmaceutical~~all ~~companies,~~push ~~ignoring~~the ~~several~~demand ~~profitable~~for ~~and~~miniaturized motors ~~addressable markets~~forward.

●Portability has ~~Elmiko~~long ~~Biosignals~~been ~~sp.~~a ztrend ~~o.o.~~for –convenience, ~~Elmiko~~but ~~Medical~~an isinterconnected aglobal ~~Warsaw-based~~world, ~~private~~increasingly ~~company~~complex ~~specializing~~robotic insystems, ~~designing~~ and ~~developing~~an ~~medical~~increasingly mobile ~~electronics~~workforce ~~and~~all ITspeak ~~solutions.~~to ~~Elmiko~~the ~~primarily~~need ~~sells~~for ~~their~~micro-sized ~~products~~motors to be more energy and ~~services~~weight efficient than before. According to ~~scientific~~an ~~institutes,~~article from ~~medical~~ISA ~~universities,~~(International ~~hospitals~~Society of Automation), increased human-robotics interactions and ~~private~~systems ~~clinics~~is ~~across~~a primary driver behind the ~~world~~trend of compact portability for robotics and motion systems. These trends are likely to support market growth for our products.

●Opportunity: Increased ~~Contec~~need –for ~~Contec~~small isprecision amotion China-based private medical device company focusing on research, manufacturing, and distribution of medical instrument since 1996. Contec currently has over 20 products in its portfolio focusing on the medical-technology industry ranging from stethoscopes to EEGs.systems

●To drive ~~Electrical~~progress ~~Geodesics~~in current hardware systems and robotics, ~~Inc~~and to keep pace with software and analytical developments, we believe increased motion precision is needed. –The ~~EGI~~World Economic Forum estimates that by 2025 humans will create 463 exabytes of data each day globally. For context, one exabyte is anequal ~~Oregon-based~~to ~~medical-device~~1 ~~company~~million ~~founded~~terabytes. inThis ~~1992~~predicted influx of data creation data will likely drive more precise analytics, ~~EGI~~predictions, ~~specializes~~and recommendations – but to drive change in ~~making~~the ~~dense~~physical ~~array~~world ~~EEG~~we ~~(dEEG)~~believe ~~for~~will ~~research~~require ~~laboratories~~motion systems capable of such high precision.

●Piezoelectric motors ~~Masimo~~are ~~Corporation~~generally –more ~~Masimo~~precise isthan aDC ~~California-based public (NASDAQ: MASI) medical technology company that develops and manufactures innovative noninvasive patient monitoring technologies~~motors, ~~including~~so ~~medical~~they ~~devices~~stand ~~and~~to abenefit ~~wide array of sensors. Masimo has a wide array of products, ranging~~ from ~~pulse~~demand ~~oximetry~~for togreater ~~EEGs~~precision. The ~~company~~primary ~~serves~~historic ~~mainly~~limitation of ~~the~~piezoelectric ~~sleep~~motion ~~study,~~for ~~clinical~~precision ~~trial,~~applications ~~and~~has ~~athletic~~been ~~performance~~their ~~markets~~cost.

Challenge: The cost of piezoelectric motion systems

Piezoelectric systems can often cost 10x as much as a precision DC motor of a comparable size. For most precision use cases outside of the highest-cost, highest-precision applications, precision DC motors are used today. We believe that piezoelectric motion can be far more affordable while still maintaining advantages in precision, efficiency, simplicity, and weight compared to precision DC motors.

We believe that our patented technology makes us unique in this ability and will help us maintain pricing levels comparable to precision DC motors while offering piezoelectric motor performance.

● NeuroSky, Inc. – NeuroSky is a health and wellness tracking and analysis company that is advancing health solutions through consumer wearables and mobile devices, including biosensor technologies.Market Application

●Our piezoelectric ~~Oculogica,~~motion ~~Inc~~devices have many applications. –Our ~~Oculogica~~primary markets are life sciences, ~~Inc.~~MedTech, isand alab ~~private~~instruments ~~company~~given ~~looking~~those markets’ tofocus ~~better~~on ~~learn~~precision and ~~treat~~need ~~concussions,~~for ~~having~~miniaturization. ~~developed~~We anbelieve ~~eye~~devices ~~tracking~~in these fields can benefit from our technology: ~~that~~such potential ~~works~~applications toinclude ~~detect~~infusion ~~concussions~~MRI pumps, ~~the~~syringe ~~severity~~pumps, ofwearable ~~the~~drug ~~concussion~~dispensers, handheld drug dispensers, surgical robotics, microscopes and ~~the~~micro-positioning ~~treatment~~systems, ~~for~~and ~~the~~diagnostic ~~concussion~~testing equipment.

●In addition ~~Picofemto~~to ~~LLC~~the -life ~~Picofemto~~sciences ~~LLC~~industry, isour amotors ~~healthcare~~have ~~company~~market ~~focusing~~applications onin ~~assisting clinicians and research professionals with~~ a ~~web~~wider ~~platform~~set ~~that~~of ~~analyzes~~industries, ~~raw~~some ~~primary~~of ~~medical~~which ~~data~~have atalready started ~~the~~to ~~point~~use ofour ~~evaluation~~motors. ~~They~~These ~~have~~secondary ~~developed~~target amarkets ~~cloud-based~~include ~~service~~the ~~called~~advanced ~~Cliniscan~~manufacturing, ~~which~~defense, ~~allows~~laser/photonics/optic, ~~the clinician~~ semiconductor, and ~~researcher~~aerospace ~~to work in the cloud with a wide range of biomedical modalities~~industries.

● Satoris, Inc. – Satoris, Inc. is a molecular diagnostics company, engaging in the development and commercialization of neurodiagnostic tests for Alzheimer's disease. Satoris plans to have their product managed and treat neurodegenerative diseases through diagnostic tests. These tests are developed through data of molecular biology and bioinformatics.Competitive Strengths

●We believe ~~CAS~~that ~~Medical~~we ~~Systems,~~are ~~Inc.~~well –positioned ~~CAS~~within ~~Medical~~the ~~Systems,~~markets ~~Inc.~~in iswhich awe ~~developer~~operate. ofOur ~~innovative,~~competitive ~~non-invasive~~strengths ~~vital signs monitoring technologies and products that deliver patient data.~~include:

● ~~Emotiv~~Strong ~~Systems,~~Portfolio ~~Inc.~~of –Intellectual ~~Emotiv~~Property. ~~Systems,~~Our ~~Inc.~~diverse isintellectual aproperty ~~bioinformatics~~portfolio ~~company~~includes ~~advancing~~a ~~understanding~~series of ~~the~~patents ~~human~~for ~~brain~~use ~~using~~in ~~EEG.~~existing ~~Their~~products ~~technology~~and ~~aims~~future ~~to track cognitive performance~~potential, ~~monitor~~manufacturing ~~emotions~~know-how, and ~~control~~FDA ~~both~~approvals, ~~virtual~~ranging ~~and~~from ~~physical~~hardware ~~objects~~to ~~via~~firmware ~~machine learning of trained mental commands~~applications.

● Atlas Wearables, Inc. – Atlas Wearables, Inc. is a data analytics company and the developer of a fitness monitor designed to improve indoor and outdoor training. Their goal is to use the combination of data acquired from the lab along with each unique set of data from the customer, to provide clear and current knowledge based on data results.

● Bazifit, Inc. – BaziFIT makes a modular sensor system by the same name that works to monitor the neuromuscular efficiency, strength, stability, and calories burned during the customer’s workout. Their physical technology is an attachment that goes on various workout equipment that helps the customer get exercise content and quantifiable feedback on every workout instantly. Their app uses the data collected by their attachment to assess the customer’s progress and health and suggests various workouts for the customer to do to optimize the progress of their health.

● MAD Apparel Inc. – MAD Apparel Inc. is the developer of the product Athos, a performance apparel that monitors biosignals and distills them into meaningful information to improve the level of exercise the customer is performing. The technology receives data in real time and shows the customer their stats so they can alter or continue the workout.

● Mechio Inc. – Mechio Inc. is a developer of wearable fitness technology to monitor the health, fitness, and sleep of the customer.

● Sarvint Technologies, Inc. – Sarvint Technologies, Inc. is an Atlanta-based wearables technology company born from smart-garment technology research at Georgia Tech. The research led to the development of their Smart Shirt, a garment that uses special fibers to detect and monitor body vital signs. It then sends these signals to a program that can be downloaded onto smart phones to easily monitor the information collected.

● Sensifree Inc. – Sensifree Inc. develops technology to solve the shortcomings of optical sensors. Their RF based sensor technology monitors heart rate from different parts of the human body.

● Sensoria Inc. – Sensoria Inc. is a developer of wearable fitness technology that collects fitness data and connects with a real time virtual coach that gives performance and running form feedback.

● CorTechs Labs, Inc. - CorTechs Labs is a developer of medical device software solutions capable of automatically segmenting and quantifying brain structures, making quantitative analysis of MRI images of the human brain a routine part of clinical practice.

The major U.S. medical device companies who we deem as competitors include Baxter International Inc., Beckman Coulter Inc., Becton Dickinson and Company, Boston Scientific Corporation, General Electric Company’s GE Healthcare, Johnson & Johnson, St. Jude Medical, Inc., Stryker Corporation, and Medtronic plc. Many of the companies which we presently compete against or may compete against in the future have or will have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do or will. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our development.

We intend to compete based on our belief in the superiority of our products and services in functionality, cost-effectiveness, efficiency, ease of use and accuracy.

Because part of our business plan contemplates servicing the neurotech industry across multiple platforms including hardware, software, service and cloud computing, and our existing and proposed product and service platforms are in a growing industry, we believe we are in a position to take a leadership position within the sector due to our:

● Strong Portfolio of Intellectual Property. Our diverse intellectual property portfolio includes a series of patents and FDA approvals, ranging from hardware to firmware applications.

●

Diverse Commercial Application Opportunities. From smart wearable devices that monitor cognitive and behavioral health in real-time, to enhanced Brain Computer Interface or BCI capabilities within the connected home and car environments, our EEG technologies span a range of novel applications and commercial uses, including:

~~o Global Brain Monitoring Market~~Neurology

o● ~~U.S.~~Global ~~Healthcare~~Brain Monitoring Market

o● ~~Athletic~~U.S. ~~Performance~~Healthcare Market

o● ~~Government~~Athletic ~~Initiatives~~Performance

o● ~~Education~~Government ~~Enhancement~~Initiatives

o● ~~Clinical~~Education ~~Trials~~Enhancement

● ~~Scalable~~Clinical Integration. We believe that we offer the highest level of integration and flexibility while providing an optimal combination of convenience and performance. This is achieved through the modular design and build of our products, allowing seamless integration of hardware and software components into existing platforms. We are also engaged with strategic partners to augment the next generation of health wearables and technologies, forging relationships with companies and individuals seeking to implement EEG solutions across a multitude of segments.Trials

● Experienced Leadership Team. The MemoryMD™ team has over 30 years of combined experience in sectors spanning across artificial intelligence, data mining, software development, commercialization, and medical technology. With a firm background in medical grade EEG applications, our team has a qualified perspective on electrode quality and brain wave interpretation.Piezo Motion

● ~~Centralized~~Medical Cloud Data Collection. Neuro-net algorithms and other mathematical models based on EEG interpretation mine for unique brain patterns on a global scale. These patterns are continuously trained and visualized to provide reliable health data and insights that consumers, developers, and companies can leverage across the entire MemoryMD™ platform.Technology

●

Pharmaceutical

●

Aerospace (including Drones)

●

Industrial Automation

●

Autonomous Vehicles

●

Laser and Photonics

Scalable Integration. We believe that we offer the highest level of integration and flexibility while providing an optimal combination of convenience and performance. This is achieved through the modular design and build of our products, allowing seamless integration of hardware and software components into existing platforms. We are also engaged with strategic partners to augment the next generation of health wearables and technologies, forging relationships with companies and individuals seeking to implement EEG solutions across a multitude of segments.

Experienced Leadership Team. Our management team has over 150 years of combined experience in sectors spanning across artificial intelligence, data mining, software development, commercialization, and medical technology. Our team has a strong background in our technologies and applications and defining future potential applications.

NeuroCap™

●

NeuroCap™ is a NeuroCap™ is FDA 510(k) cleared pre-gelled disposable EEG headset with 22 electrodes and 19 active EEG channels. The fixed electrode placement is in accordance with the international 10-20 system.

●

NeuroCap™ is compatible with any other encephalographs and amplifiers of EEG signals by the use of a universal connector cable.

●

The pre-gelled fixed electrode locations remove the time-consuming task of placing electrodes and measuring and marking the patient’s head. This enables the use of this device by healthcare workers other than specialized neurological technicians and can decrease discomfort experienced by the patient.

●

The NeuroCap™ is cleared for up to 4 hours of continuous use, well beyond the duration of a routine EEG exam.

NeuroEEG™

●

NeuroEEG™ is an FDA 510(k) cleared wireless 16 channel EEG amplifier device.

●

NeuroEEG™ is compatible with our NeuroCap™ device via a cable and any computer with Bluetooth capabilities. This allows for freedom of movement of the patient while undergoing an EEG exam.

●

The compact size of the NeuroEEG™, roughly the size of a human palm, allows for field, ambulatory, and remote use settings more than the larger traditional EEG devices commonplace today. When paired with the NeuroCap™, it can allow for non-specialized healthcare personnel to conduct EEG exams remotely from a neurologist or hospital.

Motion Products

●

High Performance: Technology that provides up to 1000 X’s Better Resolution, up to 100 X’s Faster Reaction Time and up to 10X’s Greater Specific Power Stall Torque/Force compared to conventional DC motors (e.g., precision BLDC motors and Stepper motors. A typical commercial rotary stepper motor provides between 200-500 steps to complete a full rotation, whereas our rotary motors can provide over 600,000 steps per full rotation, making them extremely precise.

●

Energy & Cost Savings: Our piezo motors operate at low voltage (e.g., 5.0 VDC to 12 VDC) and have increased energy efficiency. They consume zero power in the hold position while still maintaining full torque. They are typically used in direct-drive applications where the need for a gearhead and electrical brake is eliminated altogether.

●

Unique Properties: Our piezo motors are scalable in design (rotary and linear), can be operated silently and provide a very smooth vibration-free rotation. Their non-magnetic design eliminates problems caused by electromagnetic interference.

●

Non-magnetic: Our piezo motors are also available in completely non-magnetic (non-ferrous) configurations making them ideal for specialized applications where traditional DC motors cannot be used (e.g., medical MRI)

●

Lightweight: Our piezo motors are between 50-75% less weight than comparable DC motors (e.g., BLDC & Stepper motors)

●

Low Cost: Modern engineered thermoplastic design enables our piezo motors to be manufactured at low cost and priced extremely competitively compared to other brands and technologies. The simplified electronic driver design lowers ownership cost further.

~~Neurology:~~Intellectual ~~Market Application~~Property

~~For~~Protection ~~neurologists~~of ~~and~~our ~~other~~intellectual ~~health~~property ~~providers,~~is ~~we aim to provide~~ a ~~solution~~strategic priority for ~~monitoring~~our ~~patient~~business. ~~health~~We ~~and~~rely ~~safety~~on ~~across~~ a ~~variety~~combination of ~~locations including~~patents, ~~the hospital~~trademarks, ~~specialized clinics~~copyrights, ~~and~~trade secrets ~~home~~as ~~settings.~~well Inas ~~managing~~nondisclosure ~~patients~~and ~~with~~assignment ~~epilepsy,~~of ~~providers~~invention ~~can improve in areas concerning patient re-admittance~~agreements, ~~patient~~confidentiality ~~mortality~~agreements and ~~morbidity.~~other ~~Providers~~measures ~~can~~to ~~also~~protect ~~proactivity prevent the onset of negative chronic health conditions~~our byintellectual ~~engaging~~property ~~with~~and ~~at-risk~~other ~~populations~~proprietary ~~at a fraction of the cost by implementing our affordable EEG solutions~~rights.

~~For~~Patents ~~health~~and ~~providers,~~trademarks ~~our~~are ~~offering~~significant ofto anour ~~EEG~~business ~~monitoring~~to ~~solution~~the ~~could~~extent ~~ease~~that ~~data~~a ~~collection~~product ~~efforts.~~or ~~By providing~~ an ~~accurate~~attribute ~~and~~of ~~consistent stream~~a ofproduct ~~EEG~~represents ~~data,~~a ~~our~~unique ~~products~~design ~~and~~or process. ~~services~~Patent ~~are~~protection ~~being~~restricts ~~designed~~competitors tofrom ~~allow~~duplicating ~~physicians~~unique designs and ~~other~~features. ~~health~~To ~~professionals~~protect toour ~~make~~proprietary ~~use~~secrets ~~of newly~~and ~~available~~competitive ~~bio-metric~~technologies, ~~data~~we tohave ~~improve~~obtained ~~diagnosis,~~and ~~treatment~~are ~~and~~seeking ~~management~~to offurther ~~various~~obtain ~~neurological~~patents, ~~illnesses~~trade secrets, ~~effectively~~trademarks, ~~increasing~~and ~~the~~other intellectual ~~quality~~property ~~and~~protection ~~value~~on ~~add~~our ofproducts ~~medical~~whenever ~~services~~appropriate.

~~Our portability~~As ~~and~~of ~~integration~~the ~~potential~~date ~~augment~~of ~~the~~this ~~existing~~filing, we ~~suite~~have ofobtained ~~remote~~a ~~monitoring~~total ~~solutions,~~of ~~allowing~~sixteen ~~physicians~~(16) toU.S. ~~more~~nonprovisional ~~accurately differentiate~~patents ~~between~~and ~~nuanced~~thirteen ~~neurological~~(13) ~~conditions~~foreign ~~happening~~patents ~~within~~including European, Japanese, and Chinese ~~outside~~patents ~~the~~related ~~hospital~~to ~~setting~~our NeuroCap™ and piezoelectric technologies. AnThese ~~example~~patents ~~includes~~are ~~helping~~to protect our existing products for ~~neurologist’s~~both ~~contrast~~neurology ~~nocturnal~~and ~~epilepsy~~piezoelectric ~~patterns~~motors. ~~across~~For ~~other~~our ~~sleep~~piezoelectric ~~disorders~~motors, ~~such~~we ascurrently ~~parasomnias~~exploit ~~where~~four ~~individuals~~of ~~engage~~our inrelevant US patents. The remainder ~~abnormal~~may ~~movements~~be ~~during~~used ~~sleep~~for future development.

~~Neurology:~~We ~~Sales~~have ~~and~~one ~~Marketing~~European patent application pending titled “Liner Piezoelectric Actuator on Rail System” (Application No. 18761639). We have also applied for one provisional U.S. patent application titled “Integrated Brain Machine Interface Platform with Graphene Based Electrodes” (Application No.: 63/070,749) in the name of Memory MD, Inc.

We ~~have~~also ~~commenced~~own ~~the~~four ~~commercial~~registered ~~roll-out~~trademarks of(Neuro ~~the~~EEG, ~~NeuroEEG™ and~~ NeuroCap™, ~~on a limited basis~~NeuroHub, ~~initially~~Brain ~~targeting the United States market~~Scientific). We are identifying additional long-term partners to accelerate market penetration, product diversification, and ultimate survivability across targeted verticals. Through new implementations of our EEG products and services, we expect to retain and capture additional market share through continuous enhancements.

WeIn ~~plan~~May to2018, ~~utilize~~we ~~partner~~entered ~~relationships~~into a Patent Assignment and ~~co-marketing~~License ~~opportunities~~Back asAgreement with Boris Goldstein, our then Chairman, Secretary and Executive Vice President, Dmitriy Prilutskiy, Stanislav Zabodaev and Medical Computer Systems Ltd. Pursuant to the ~~initial~~agreement, ~~driver~~among other things, Messrs. Goldstein, Prilutskiy and Zabodaev assigned all of ~~our~~their ~~marketing~~rights ~~efforts~~to a patent entitled “Apparatus And Method For Conducting Electroencephalography” (Application No.: 15/898,611), ~~thereby~~to ~~benefiting~~us, and in return, we granted to Medical Computer Systems Ltd., an unaffiliated ~~from~~entity ~~increased~~which ~~speed-~~also provides manufacturing services to us, a limited, royalty-~~market~~free, asfully ~~well~~paid-up, asworldwide, nonexclusive license (without the ~~ability~~right to ~~leverage~~sublicense aor ~~pre-existing~~assign), ~~audience/customer~~to ~~base~~the patent, to practice, make and ~~communications~~use ~~channels. We~~the ~~expect~~inventions, ideas and information embodied therein, and to make, use, offer to ~~early~~sell, ~~adopters~~sell, lease or import products, services, processes, methods and materials embodying or deriving from the inventions, ideas and information from the patent and any activities derived directly therefrom; provided, however, that if and upon FDA approval of a product, Medical Computer Systems’ aforementioned rights shall be limited to manufacturing and selling NeuroCap™ products solely to us or on our behalf provided that we purchase from Medical Computer Systems (and Medical Computer Systems makes available for sale) a minimum of 20,000 units of NeuroCap™ products per calendar year on reasonable terms and ~~services~~conditions atto ~~preferential~~be ~~rates~~determined by the parties in ~~exchange~~good ~~for~~faith; ~~expediting~~and ~~development~~provided further, ~~distribution~~however, that Medical Computer Systems can without any limitation sell NeuroCap™ products embodying or deriving from the inventions, ideas and ~~sales~~information from the patent in (i) the territories that made up the former USSR (excluding the Baltic countries) and (ii) Japan. In furtherance of ~~such~~the ~~products~~foregoing first proviso, in the event we fail to purchase the annual minimum order for a particular calendar year, Medical Computer Systems’ limitation to manufacture and ~~services~~sell NeuroCap™ products only to us pursuant to this proviso will be suspended for the next calendar year.

~~Our~~In ~~marketing~~September ~~and~~of ~~sales~~2015 ~~strategy~~we entered isinto ~~focused~~a onLicense ~~rapid,~~Agreement ~~cost-effective~~with ~~delivery~~Parker ofHannifin ~~high-quality~~Corporation ~~products~~in ~~into~~which ~~the~~we ~~U.S.~~granted ~~and~~a ~~international~~worldwide ~~healthcare~~license ~~market.~~under ~~The~~our ~~sales~~patents ~~strategy is~~for tocertain ~~sell through distribution partners~~pneumatic, gas ~~indirect~~and ~~sales~~fluid ~~channels.~~control Wedevices ~~also~~for ~~plan~~sale tointo ~~penetrate~~ the ~~neurology~~pneumatic ~~and~~industrial ~~diagnostic~~factory ~~imaging~~automation ~~subsectors of the MedTech industry~~ market, ~~via planned~~ medical ~~device~~equipment ~~distributor~~gas/liquid ~~arrangements~~control ormarket and ~~partnering~~instrumentation ongas/liquid ~~distribution~~control ofmarket. ~~NeuroCaps~~Under ~~through existing~~the ~~EEG~~License ~~manufacturers~~Agreement ~~and~~we ~~expanding~~received ~~into~~an ~~nursing~~initial ~~homes~~fee ~~and~~of ~~primary~~two ~~care~~million ~~practices~~dollars ($2,000,000.00) which Wewas ~~intend~~paid ~~for~~in ~~our~~two ~~products’~~annual ~~initial~~installments ~~entry into~~in ~~the~~2015 ~~market~~and ~~would~~2016. beTo-date atwe ~~emergency~~have ~~departments,~~not ~~ICU’s~~received ~~and~~any ~~other~~additional ~~acute~~royalties ~~care~~from ~~settings~~Parker inHannifin under the ~~United~~License ~~States~~Agreement.

Since 2019, we have acted as a distributor of third-party medical devices in Russia, which we expect to continue while we commercialize our Products and seek to generate material revenue from those sources. While we intend to continue the sale of third-party medical devices, we do not intend for it to be our primary source of revenue in the long-term and expect to curtail or cease this line of operations as, if and when we commence generating material, recurring revenues from our Products. The Russian invasion of Ukraine on February 24, 2022 may impact the operation of our Russian subsidiary. Economic sanctions and inflation may have a negative impact. Further, the Russian government may take actions to inhibit the operations of companies which are 100% owned by U.S. companies.

Neurology Reimbursement

Coverage in the United States

Regarding ICD-10 codes, the International Classification of Diseases, Tenth Edition (ICD-10) is a clinical cataloging system that went into effect for the U.S. healthcare industry on October 1, 2015, after a series of lengthy delays. Accounting for modern advances in clinical treatment and medical devices, ICD-10 codes offer many more classification options compared to those found in its predecessor, ICD-9. Within the healthcare industry, providers, coders, IT professionals, insurance carriers, government agencies and others use ICD codes to properly note diseases on health records, to track epidemiological trends and to assist in medical reimbursement decisions.Competition

WeAll ~~believe~~of ~~that~~our ~~many~~products face a mixture of ~~the~~competitors ~~indications~~ranging wefrom ~~are~~large ~~pursuing~~manufacturers with ~~our~~multiple ~~technologies~~business ~~are~~lines ~~currently~~to ~~reimbursed~~small onmanufacturers offering a ~~widespread~~limited ~~basis~~selection byof ~~Medicare, Medicaid~~products and ~~private insurance companies~~services.

~~Medicare,~~Many ~~Medicaid,~~of ~~health maintenance organizations and other third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and~~ the ~~level~~competitors ofwhom ~~reimbursement~~we ofdirectly ~~new~~compete ~~medical~~with ~~devices,~~include ~~and,~~companies aswho adevelop ~~result, their coverage policies may be restrictive,~~ or ~~they~~ ~~may~~intend ~~not cover or provide adequate payment for our Products. In order~~ to ~~obtain~~develop ~~reimbursement~~products ~~arrangements,~~which ~~we may~~ have ~~to agree~~capabilities similar to aours ~~net sales price lower than the net sales price we might charge~~ in ~~other~~both ~~sales channels. Our revenue may be limited by~~ the ~~continuing efforts~~neurology ~~of government~~ and ~~third-party~~motion ~~payors~~products tomarkets. ~~contain~~Similar orcompetitive ~~reduce~~pressures ~~the~~on ~~costs of healthcare through various increasingly sophisticated means~~efficiency, ~~such~~quality ~~as requiring prospective reimbursement~~ and ~~second opinions, purchasing in groups, or redesigning benefits. Our future dependence~~simplicity onare ~~the~~shared ~~commercial~~by ~~success~~both of our ~~technologies~~product ~~makes us particularly susceptible to any cost containment or reduction efforts~~lines. Accordingly, unless government and other third-party payors provide adequate coverage and reimbursement for our Products and the related insertion and removal procedures, our financial performance may be limited.

~~Coverage~~The ~~Outside~~MedTech industry is moving rapidly with wearable technology, robotic surgery, and telemedicine. In the ~~United~~current ~~States~~environment of managed care, economically motivated customers, consolidation among health care providers, increased competition, and declining reimbursement rates, we anticipate an increasing need to compete on the basis of price and quality. In order to continue to compete effectively, we must continue to create or acquire advanced technology, incorporate this technology into our current and future proprietary products, obtain regulatory approvals in a timely manner, maintain high-quality manufacturing processes, and successfully market these products. Some of these initiatives include, but are not limited to, creating integrated cloud solutions that connect specialists with generalists for simple data transfer and analysis, streamlining clinical diagnoses with new medical devices, and opening revenue streams from secondary healthcare markets, such as primary care medical professionals who utilize EEG analyses in their practices.

IfThe major U.S. medical device companies who we ~~seek~~deem toas ~~commercialize~~competitors ~~our~~include ~~Products~~Baxter inInternational ~~countries~~Inc., ~~outside~~Beckman ~~the~~Coulter ~~United~~Inc., ~~States~~Becton Dickinson and Company, ~~coverage~~Boston ~~may~~Scientific beCorporation, ~~available~~General ~~from~~Electric ~~certain~~Company’s ~~governmental~~GE ~~authorities~~Healthcare, ~~private~~ ~~health~~Johnson ~~insurance~~& ~~plans~~Johnson, St. Jude Medical, Inc., Stryker Corporation, and ~~labor~~Medtronic ~~unions~~plc. ~~Coverage~~Many ~~systems~~of the companies which we presently compete against or may compete against in ~~international~~the future ~~markets~~have ~~vary~~or will have significantly bygreater ~~country~~financial resources and expertise in research and development, ~~within~~manufacturing, preclinical ~~some~~testing, ~~countries~~conducting clinical trials, byobtaining ~~region.~~regulatory Ifapprovals, weand ~~seek~~marketing toapproved ~~commercialize~~products ~~our~~than ~~technology,~~we ifdo ~~approved,~~or ~~outside~~will. Mergers and acquisitions in the ~~U.S.~~pharmaceutical, ~~coverage~~biotechnology ~~approvals~~and ~~must~~diagnostic beindustries ~~obtained on~~may result in even more resources being concentrated among a ~~country-by-country,~~smaller ~~region-by-region~~number of our competitors. Smaller or, inearly-stage ~~some~~companies ~~instances~~may also prove to be significant competitors, aparticularly ~~case-by~~through collaborative ~~case~~arrangements ~~basis~~with large and established companies. ~~Based~~These oncompetitors ~~our~~also ~~ongoing~~compete ~~evaluation~~with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, ~~certain~~as ~~countries~~well as in ~~reimburse~~acquiring ~~more~~technologies ~~highly~~complementary ~~than~~to, ~~others~~or necessary for, our development.

~~Neurology:~~Our ~~Manufacturing~~motion products and services compete against a range of competitors spanning large, ~~Supply~~established manufacturers with many product lines to startups with only a few employees doing custom projects. Most of the competitors we directly compete with sell either piezoelectric motors at a higher price point than us or precision DC motors at a similar price point but with lower precision and ~~Quality~~efficiency. ~~Assurance~~Our indirect competitors sell other types of small, precise motors or motion systems that may be able to fulfill some of the same use cases outside of the target focus of our products. Meanwhile our Micro Dosing Pump competes for sale to labs and researchers against microinjectors and micropumps since our product fulfills the use cases of both current product categories.

WeThe ~~currently~~trends ~~outsource~~of ~~the~~miniaturization ~~supply~~ and ~~manufacture~~portability ofare ~~all~~putting ~~components~~pressure ofon ~~our~~manufacturers ~~NeuroEEG~~of ~~and~~motion ~~NeuroCap.~~systems ~~We plan~~ to ~~continue~~design ~~with~~smaller, anmore ~~outsourced~~efficient, ~~manufacturing~~and ~~arrangement~~more ~~for~~precise ~~the~~motors. ~~foreseeable~~In ~~future.~~addition, Wethe ~~expect~~manufacturing ~~that~~systems ~~our~~and ~~third-party~~robotics ~~manufacturers~~used ~~will~~to beserve ~~competent~~these totrends ~~manufacture~~also ~~our~~need increasingly precise ~~Products~~motors. ~~and~~These ~~have~~trends ~~quality~~play ~~systems~~well ~~established~~into ~~that~~the ~~meet~~advantages ~~FDA~~of ~~requirements.~~piezoelectric Wemotors, ~~believe~~which ~~the~~have ~~manufacturers~~traditionally wecome ~~currently~~at ~~utilize~~a orcost ~~that~~point weprohibitive ~~may~~to ~~utilize~~many inuse ~~the~~cases ~~future~~outside ~~have~~of ~~sufficient~~advanced ~~capacity~~aerospace, tooptics, ~~meet~~and ~~our~~defense ~~launch~~industries. ~~requirements~~When ifpiezoelectric ~~our~~motors ~~technology~~are ~~under~~too ~~development~~expensive, isprecision DC ~~approved~~motors, ~~in the~~with ~~future~~poorer efficiency and precision, are ~~able~~the togeneral ~~scale~~solution. upNow ~~their~~we ~~capacity~~have ~~relatively~~invented ~~quickly~~piezoelectric ~~with~~motion ~~minimal~~systems ~~capital~~that ~~investment.~~are significantly Wemore ~~believe~~affordable ~~that,~~than astraditional wepiezoelectric ~~increase our~~systems ~~demand~~while inmaintaining the ~~future,~~unique ~~our~~advantages ~~per~~of ~~unit~~piezoelectric ~~costs~~technology. There ~~will~~are ~~decrease~~a ~~materially.~~couple Weof ~~have~~other ~~also~~small ~~identified~~manufacturers ~~capable~~attempting ~~second~~more ~~source~~affordable ~~manufacturers~~piezoelectric ~~and suppliers~~motors inas ~~the~~well ~~event~~but ofmost ~~disruption~~focus ~~from~~on ~~any~~the ofhigh-end, ultra-precise ~~our~~applications ~~primary~~piezoelectric ~~vendors~~motors are traditionally known for.

Our suppliers meet ISO 13485 certification requirements, which includes design control requirements. As a medical device developer, the facilities of our sterilization and other critical suppliers are subject to periodic inspection by the FDA and corresponding state and foreign agencies. We plan to audit our suppliers periodically to ensure conformity with the specifications, policies and procedures for our devices.

Neurology: Research and Development

Our research and development programs are generally pursued by engineers and scientists employed by us on a full-time basis or hired as per diem consultants or through partnerships with industry leaders in manufacturing and design and researchers and academia. We are also working with subcontractors in developing specific components of our technologies.

The primary objective of our research and development program is to advance the development of our existing and proposed Neurology Products and to enhance the commercial value of such Neurology Products.

~~Neurology: Government~~Sales ~~Regulation~~and Marketing

~~Our NeuroEEG~~We ~~and~~have ~~NeuroCap~~commenced ~~are each a medical device subject to extensive and ongoing regulation by~~ the ~~FDA, the U.S. Centers for Medicare~~commercial &roll-out ~~Medicaid~~of ~~Services, or CMS,~~ the ~~European~~neurology ~~Commission,~~products ~~and regulatory bodies~~ in ~~other~~2018 ~~countries. Regulations cover virtually every critical aspect of a medical device company’s business operations, including research activities, product development, quality~~ and ~~risk~~the ~~management,~~Blue ~~contracting,~~Series ~~reimbursement,~~in ~~medical communications, and sales and marketing~~2020. InFor ~~the~~our ~~United~~neurology ~~States,~~products ~~the~~we ~~Federal~~are ~~Food, Drug~~initial ~~and~~targeting ~~Cosmetic Act, or FDCA, and~~ the ~~implementing~~U.S. regulations of the FDA govern product design and development, pre-clinical and clinical testing, premarket clearance or approval, product manufacturing, quality systems, import and export, product labeling, product storage, recalls and field safety corrective actions, advertising and promotion, product sales and distribution, and post-market ~~clinical surveillance~~. ~~Our~~For ~~business~~our ismotion ~~subject to federal~~products, ~~state,~~we ~~local,~~intend ~~and~~to ~~foreign~~market ~~regulations,~~on ~~such~~a asglobal ~~ISO~~basis ~~13485,~~with ~~ISO~~business ~~14971,~~representatives ~~FDA’s~~in ~~Quality~~the ~~System Regulation~~U.S., or ~~QSR~~Europe, ~~contained in 21 CFR Part 820,~~ and ~~the European Commission’s Directive 93/42/EEC concerning medical devices and its amendments~~Asia.

UOur marketing organization operates as a shared service across both product lines.S Marketing focuses on digital platforms, support of marketing partners and participation in trade shows. We are identifying additional long-term partners to accelerate market penetration, product diversification, and ultimate ~~Regulation~~survivability across targeted verticals. Through new implementations of our products and services, we expect to retain and capture additional market share through continuous enhancements. Our neurology products are sold initially through distribution partners or directly to hospitals and neurology clinics. Our motion products sales strategy focuses on OEM product manufactures where size, precision and scale are key characteristics of their product needs. We provide resources online that allow OEM’s to learn and incorporate our motor into their product designs. We offer evaluation kits direct from our website and through our partner network.

~~The FDA~~We ~~characterizes~~plan ~~medical devices into one of three classes. Devices that are considered by the FDA~~ to ~~pose~~utilize ~~lower risk are classified~~partner asrelationships ~~Class I or II. Class I devices~~ and ~~are subject to controls for labeling, pre~~co-~~market~~marketing ~~notification~~opportunities ~~and~~as ~~adherence to~~ the ~~FDA’s QSR.~~initial ~~This~~driver ~~pertains to manufacturers’ methods and documentation~~ of ~~the~~our ~~design,~~marketing ~~testing~~efforts, ~~production,~~thereby ~~control~~benefiting ~~quality~~from ~~assurance,~~increased ~~labeling~~speed-to-market, ~~packaging,~~as ~~sterilization,~~well ~~storage~~as ~~and shipping of products, but are usually exempt from premarket notification requirements. Class II devices are subject to~~ the ~~same~~ability ~~general controls but may be subject~~ to ~~special~~leverage ~~controls~~a ~~such as performance standards, post~~pre-~~market~~existing ~~surveillance, FDA~~audience/customer ~~guidelines,~~base ~~or particularized labeling,~~ and ~~may~~communications ~~also~~channels. ~~require~~We ~~clinical~~expect ~~testing~~to ~~prior~~offer to ~~clearance~~early ~~or approval. Class III devices are~~adopters ~~those~~our ~~for~~products ~~which insufficient information exists to assure safety~~ and ~~effectiveness~~services ~~solely~~at ~~through~~preferential ~~general~~rates ~~or special controls, including devices that support or sustain human life, are of substantial importance~~ in ~~preventing~~exchange ~~impairment~~for ofexpediting ~~human health~~development, ~~or which present a potential~~distribution, ~~unreasonable~~and ~~risk~~sales of ~~illness~~such orproducts ~~injury~~and services.

Our linear and rotary motion products are commercially available directly from Piezo or from one of our worldwide distribution partners. We market our solution through an integrated digital marketing program and in-person trade shows and conferences. Our partners market our products directly to their customers in their local markets.

Since 2019 and until the second quarter of Fiscal 2022, we have acted as a distributor of third-party medical devices in Russia. With the uncertainty raised due to the continued Russian invasion of Ukraine, and with such operations no longer part of the Company’s business plan, the Company began winding down the operations of MMDR. MMDR completed all distribution agreements and terminated all employees in May 2022.

Manufacturing, Supply and Quality Assurance

Our manufacturing is a combination of outsourced and in-house for our two product lines.

We currently outsource the supply and manufacture of all components of our neurology products. For our neurology products, we plan to continue with an outsourced manufacturing arrangement for the foreseeable future. We expect that our third-party manufacturers will be competent to manufacture our products and have quality systems established that meet FDA requirements. We believe that the manufacturer which we currently utilize or those manufacturers that we may utilize in the future have or will have sufficient capacity to meet our launch requirements when and if our technology under development is approved and are or will be able to scale up their capacity relatively quickly with minimal capital investment. We have also identified capable second source manufacturers and suppliers in the event of disruption from any of our primary vendors.

Our piezoelectric motors are currently fully assembled and tested in-house. The material components used in the assembly process include plastics, piezoceramics and metals. The main housing for our motors is produced from engineered thermoplastic. We currently use two plastics companies to produce these injection molded parts. One of these companies is located locally in Florida, the other company is located overseas. Our assembly area consists of a localized storeroom, a site for fabrication, subassembly manufacturing, final assembly, and test/quality verification. We continue to look to enhance our processes by focusing on automation and lean initiatives.

Our piezoelectric motor materials from suppliers are routinely inspected for quality and conformance against documented specifications. We are in the process of securing certification for ISO 9001 quality management systems. Our piezoceramics are currently sourced from two suppliers, one is located in the US, the other is overseas. The vast majority of all other components, including electronic components used in the assembly of our motors and associated electronics, are available off-the-shelf from various suppliers sourced within the U.S.

We believe that the suppliers we currently utilize or that we may utilize in the future have or will have sufficient capacity to meet our launch requirements and are or will be able to scale up their capacity relatively quickly as demand for our product grows. We believe that with increased future demand, our per unit costs will decrease materially. Our suppliers meet the quality management systems for ISO 13485 or 9001 as required by the product. As a medical device developer, the facilities of our sterilization and other critical suppliers are subject to periodic inspection by the FDA and corresponding state and foreign agencies. We plan to audit our suppliers periodically to ensure conformity with the specifications, policies, and procedures for our devices. We have also identified capable second source suppliers in the event of disruption from any of our primary vendors.

Research and Developments

Our research and development programs are performed in the U. S., Ukraine and internationally. Our research and development is generally pursued by engineers and scientists employed by us on a full-time basis or hired as per diem consultants or through partnerships with industry leaders in manufacturing, design, research, and academia. We are also working with subcontractors in developing specific components of our technologies. Since the Russian invasion of Ukraine on February 24, 2022, our personnel in Ukraine have been able to work from the office. They are currently working in the office and remotely; however, may not be able to return consistently to an office location during the foreseeable future.

The primary objective of our research and development program is to advance the development of our existing and future products and technologies. This work includes studies focused on topics such as:

●

Solid-state physics of piezoelectric materials;

●

Materials Research;

●

Electromechanical properties of piezoceramic materials;

●

Resonance and frequency response profiling of piezoceramic materials;

●

Piezoelectric motor and actuators concept and prototyping;

●

Thermodynamic relationships;

●

Impedance analyzer characterization of piezoelectric properties;

●

Development of electronic hardware for piezo resonator excitation;

●

Development of firmware and software algorithms for piezo motor control; and

●

Intellectual property development.

Government Regulation

Our operations are subject to comprehensive federal, state, and local laws and regulations in the jurisdictions in which we or our manufacturing and research and development partners do business. The laws and regulations governing our business and interpretations of those laws and regulations are subject to frequent change. Our ability to operate profitably will depend in part upon our ability, and that of our manufacturing and research and development partners and affiliates, to operate in compliance with applicable laws and regulations. The laws and regulations relating to medical products that apply to our business and that of our partners and affiliates continue to evolve, and we must, therefore, devote significant resources to monitoring developments in legislation, enforcement, and regulation in such areas. As the applicable laws and regulations change, we are likely to make conforming modifications in our business processes from time to time. We cannot provide assurance that a review of our business by courts or regulatory authorities will not result in determinations that could adversely affect our operations or that the regulatory environment will not change in a way that restricts our operations.

U.S. Healthcare Regulation

Our NeuroEEG™ and NeuroCap™ are each a medical device subject to extensive and ongoing regulation by the FDA, the U.S. Centers for Medicare& Medicaid Services, or CMS, the European Commission, and regulatory bodies in other countries. Regulations cover virtually every critical aspect of a medical device company’s business operations, including research activities, product development, quality and risk management, contracting, reimbursement, medical communications, and sales and marketing. In the U.S., the Federal Food, Drug and Cosmetic Act, or FDCA, and the implementing regulations of the FDA govern product design and development, pre-clinical and clinical testing, premarket clearance or approval, product manufacturing, quality systems, import and export, product labeling, product storage, recalls and field safety corrective actions, advertising and promotion, product sales and distribution, and post-market clinical surveillance. Our business is subject to federal, state, local, and foreign regulations, such as ISO 13485, ISO 14971, FDA’s Quality System Regulation, or QSR, contained in 21 CFR Part 820, and the European Commission’s Directive 93/42/EEC concerning medical devices and its amendments.

The FDA characterizes medical devices into one of three classes. Devices that are considered by the FDA to pose lower risk are classified as Class I or II. Class I devices and are subject to controls for labeling, pre-market notification and adherence to the FDA’s QSR. This pertains to manufacturers’ methods and documentation of the design, testing, production, control quality assurance, labeling, packaging, sterilization, storage, and shipping of products, but are usually exempt from premarket notification requirements. Class II devices are subject to the same general controls but may be subject to special controls such as performance standards, post-market surveillance, FDA guidelines, or particularized labeling, and may also require clinical testing prior to clearance or approval. Class III devices are those for which insufficient information exists to assure safety and effectiveness solely through general or special controls, including devices that support or sustain human life, are of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury.

Some Class I and Class II devices are exempted by regulation from the pre-market notification requirement under Section 510(k) of the FDCA, also referred to as a 510(k) clearance, and the requirement of compliance with substantially all of the QSR. However, a pre-market approval, or PMA application, is required for devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life-supporting or certain implantable devices, or those that are “not substantially equivalent” either to a device previously cleared through the 510(k) process or to a “preamendment” Class III device in commercial distribution before May 28, 1976 when PMA applications were not required. The PMA approval process is more comprehensive than the 510(k) clearance process and typically takes several years to complete. While the 510(k) process is typically shorter than a PMA process, both the 510(k) clearance and PMA processes can be expensive and lengthy.

Our current devices (NeuroCap ™ and NeuroEEG)™ devices are classified as Class II medical devices by the ~~United States~~ U.S.FDA.

FDA review of a PMA application generally takes between one and three years but may take significantly longer. The FDA can delay, limit or deny approval of a PMA application for many reasons, including:

●

the device may not be safe, effective, reliable or accurate to the FDA’s satisfaction;

●

the data from pre-clinical studies and clinical trials may be insufficient to support approval;

●

the manufacturing process or facilities may not meet applicable requirements; and

●

changes in FDA approval policies or adoption of new regulations may require additional data.

If an FDA evaluation of a PMA application is favorable, the FDA will either issue an approval letter, or approvable letter, which usually contains a number of conditions that must be met in order to secure final approval of the PMA. When and if those conditions have been fulfilled to the satisfaction of the FDA, the agency will issue a PMA approval letter authorizing commercial marketing of a device, subject to the conditions of approval and the limitations established in the approval letter. If the FDA’s evaluation of a PMA application or manufacturing facilities is not favorable, the FDA will deny approval of the PMA or issue a not approvable letter. The FDA also may determine that additional tests or clinical trials are necessary, in which case the PMA approval may be delayed for several months or years while the trials are conducted, and data is submitted in an amendment to the PMA. The PMA process can be expensive, uncertain and lengthy and a number of devices for which FDA approval has been sought by other companies have never been approved by the FDA for marketing.

1517

New PMA applications or PMA supplements may be required for modifications to the manufacturing process, labeling, device specifications, materials or design of a device that has been approved through the PMA process. PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensive technical or clinical data or the convening of an advisory panel.

Clinical trials are typically required to support a PMA application and are sometimes required for a 510(k) clearance. These trials generally require submission of an application for an Investigational Device Exemption (IDE), to the FDA. An IDE allows the investigational device to be used in a clinical study in order to collect safety and effectiveness data. The IDE application must be supported by appropriate data, such as animal ~~and~~ and laboratory testing results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE application must be approved in advance by the FDA for a specified number of patients, unless the product is deemed a non-significant risk device and eligible for abbreviated IDE requirements. Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by appropriate institutional review boards at the clinical trial sites. The FDA’s approval of an IDE allows clinical testing to go forward, but it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria. All clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational ~~device~~ device labeling, prohibit promotion, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. Clinical trials must further comply with the FDA’s regulations for institutional review board approval and for informed consent and other human subject protections. Required records and reports are subject to inspection by the FDA. The results of clinical testing may be unfavorable or, even if the intended safety and efficacy success criteria are achieved, may not be considered sufficient for the FDA to grant approval or clearance of a product. Clinical trials must be entered into the clinical trials registry at clintrials.gov.

The commencement or completion of any clinical trial may be delayed or halted, or be inadequate to support approval of a PMA application, for numerous reasons, including, but not limited to, the following:

●

the FDA or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold;

●

patients do not enroll in clinical trials at the rate expected;

● patients, ~~sponsor~~sponsors, or study sites do not comply with trial protocols;

●

patient follow-up is not at the rate expected;

●

patients experience adverse side effects;

●

patients die during a clinical trial, even though their death may not be related to the products that are part of our trial;

●

institutional review boards and third-party clinical investigators may delay or reject the trial protocol;

● third-party clinical investigators decline to participate in a trial or do not perform a trial on the anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or other FDA requirements;

●

the sponsor or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans;

●

third-party clinical investigators have significant financial interests related to the sponsor or the study that the FDA deems to make the study results unreliable, or the company or investigators fail to disclose such interests;

●

regulatory inspections of our clinical trials or manufacturing facilities, which may, among other things, require us to undertake corrective action or suspend or terminate our clinical trials;

●

changes in governmental regulations or administrative actions;

●

the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or efficacy; and

●

the FDA concludes that our trial design is inadequate to demonstrate safety and efficacy.

1618

~~International~~Health Insurance Portability ~~Regulation~~and Accountability Act of 1996 and Similar Foreign and State Laws and Regulations Affecting the Transmission, Security and Privacy of Health Information

~~International sales~~We ofmay ~~medical~~also ~~devices~~be ~~are~~ subject to data ~~local~~privacy and security regulation by both the federal government ~~regulations,~~and ~~which~~the ~~may~~states ~~vary~~in ~~substantially~~which ~~from~~we ~~country~~conduct toour ~~country~~business. The ~~time~~Health Insurance ~~required~~Portability toand ~~obtain~~Accountability ~~approval~~Act inof ~~another~~1996 ~~country~~or ~~may~~HIPAA, beas ~~longer~~amended orby ~~shorter~~the ~~than~~Health ~~that~~Information ~~required~~Technology for ~~FDA~~Economic ~~approval~~and Clinical Health Act, or HITECH, and ~~the~~their respective implementing regulations, imposes specified requirements ~~may~~relating to the privacy, security and transmission ~~differ~~of individually identifiable health information. ~~There~~Among isother things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as service providers of covered entities that create, receive, maintain or transmit protected health information in connection with providing a ~~trend~~service ~~towards~~for ~~harmonization~~or on behalf of ~~quality~~a ~~system~~covered ~~standards~~entity. ~~among~~HITECH also created four new tiers of civil monetary penalties and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the ~~European~~federal HIPAA ~~Union~~laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, ~~United~~many ~~States~~state laws govern the privacy and security of health information in certain circumstances, ~~Canada~~many of which differ from HIPAA and ~~various~~ each other ~~industrialized~~in ~~countries~~significant ways and may not have the same effect.

~~The~~Foreign ~~primary~~data ~~regulatory~~privacy ~~body in Europe is that of the European Union~~regulations, ~~the European Commission, which includes most of the major countries in Europe. Other countries,~~ such as ~~Switzerland, have voluntarily adopted laws and regulations that mirror those of~~ the ~~European~~EU ~~Union~~Data ~~with~~Protection ~~respect~~Directive to(Directive ~~medical devices. The European Union has adopted numerous directives and standards regulating the design~~95/46/EC), ~~manufacture, clinical trials, labeling and adverse event reporting for medical devices. Devices that comply with~~ the ~~requirements~~country-specific ofregulations ~~these relevant directives will be entitled to bear the CE conformity marking, indicating~~ that ~~the~~implement ~~device~~Directive ~~conforms to the essential requirements of the applicable directives and~~95/46/EC, ~~accordingly,~~and ~~can be commercially distributed throughout Europe. The method of assessing conformity varies depending on~~ the ~~class~~EU ofGeneral ~~the~~Data ~~product,~~Protection ~~but normally~~Regulation ~~involves~~(GDPR) aalso ~~combination~~govern ~~of self-assessment by~~ the ~~manufacturer~~processing ~~and a third-party assessment by a “Notified Body.” This third-party assessment may consist~~ of anpersonally ~~audit~~identifiable ofdata ~~the manufacturer’s quality system~~ and specific testing of the manufacturer’s product. An assessment by a Notified Body of one country within the European Union is required in order for a manufacturer to commercially distribute the product throughout the European Union. Additional local requirements may ~~apply~~be onstricter athan ~~country-by-country basis~~U. ~~Outside of~~S. ~~the European Union, regulatory approval would need to be sought on a country-by-country basis in order for us to market our Products~~laws.

Post-Marketing Restrictions and Enforcement

After a device is placed on the market, numerous regulatory requirements apply. These include, but are not limited to:

●

submitting and updating establishment registration and device listings with the FDA;

●

compliance with the QSR, which requires manufacturers to follow stringent design, testing, control, documentation, record maintenance, including maintenance of complaint and related investigation files, and other quality assurance controls during the manufacturing process;

●

unannounced routine or for-cause device facility inspections by the FDA, which may include our suppliers’ and manufacturer’s facilities;

●

labeling regulations, which prohibit the promotion of products for uncleared or unapproved (or “off-label”) uses and impose other restrictions relating to promotional activities;

●

corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections or removals if undertaken to reduce a risk to health posed by a device or to remedy a violation of the FDCA that may present a risk to health; and

●

post-market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and effectiveness data for the device.

In addition, under the FDA medical device reporting, or MDR, regulations, medical device manufacturers are required to report to the FDA information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or a similar device of such manufacturer were to recur. The decision to file an MDR involves a judgment by the manufacturer. If the FDA disagrees with the manufacturer’s determination, the FDA can take enforcement action.

The MDR requirements also extend to health care facilities that use medical devices in providing care to patients, or “device user facilities,” which include hospitals, ambulatory surgical facilities, nursing homes, outpatient diagnostic facilities, or outpatient treatment facilities, but not physician offices. A device user facility must report any device-related death to both the FDA and the device manufacturer, or any device-related serious injury to the manufacturer (or, if the manufacturer is unknown, to the FDA) within 10 days of the event. Device user facilities are not required to report device malfunctions that would likely cause or contribute to death or serious injury if the malfunction were to recur but may voluntarily report such malfunctions through MedWatch, the FDA’s Safety Information and Adverse Event Reporting Program.

The FDA also has the authority to require the recall of commercialized medical device products in the event of material deficiencies or defects in design or manufacture. The authority to require a recall must be based on an FDA finding that there is a reasonable probability that the device would cause serious adverse health consequences or death. Manufacturers may, under their own initiative, recall a product if any distributed devices fail to meet established specifications, are otherwise misbranded or adulterated under the FDCA, or if any other material deficiency is found. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated.

The failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

●

warning letters, fines, injunctions or civil penalties;

●

recalls, detentions or seizures of products;

●

operating restrictions;

●

delays in the introduction of products into the market;

●

total or partial suspension of production;

●

delay or refusal of the FDA or other regulators to grant 510(k) clearance, PMA approvals, or other marketing authorization to new products;

●

withdrawals of marketing authorizations; or

●

in the most serious cases, criminal prosecution.

To ensure compliance with regulatory requirements, medical device manufacturers are subject to market surveillance and periodic, pre-scheduled and unannounced inspections by the FDA, and these inspections may include the manufacturing facilities of subcontractors.

Federal Trade Commission Regulatory Oversight

Our advertising for our products and services is subject to federal truth-in-advertising laws enforced by the Federal Trade Commission, or the FTC, as well as comparable state consumer protection laws. Under the Federal Trade Commission Act, or FTC Act, the FTC is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; and (c) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative or judicial penalties, including civil penalties, injunctions affecting the manner in which we would be able to market services or products in the future, or criminal prosecution.

International Healthcare Regulation

International sales of medical devices are subject to local government regulations, which may vary substantially from country to country. The time required to obtain approval in another country may be longer or shorter than that required for FDA approval, and the requirements may differ. There is a trend towards harmonization of quality system standards among the European Union, U.S., Canada and various other industrialized countries.

The primary regulatory body in Europe is that of the European Union, the European Commission, which includes most of the major countries in Europe. Other countries, such as Switzerland, have voluntarily adopted laws and regulations that mirror those of the European Union with respect to medical devices. The European Union has adopted numerous directives and standards regulating the design, manufacture, clinical trials, labeling and adverse event reporting for medical devices. Devices that comply with the requirements of these relevant directives will be entitled to bear the Conformité Européenne (CE) conformity marking (as the logo ), indicating that the device conforms to the essential requirements of the applicable directives and, accordingly, can be commercially distributed anywhere in the European Union and European Economic Area (EEA).

The method of assessing conformity varies depending on the class of the product, but normally involves a combination of self-assessment by the manufacturer and a third-party assessment by a “Notified Body.” This third-party assessment may consist of an audit of the manufacturer’s quality system and specific testing of the manufacturer’s product. An assessment by a Notified Body of one country within the European Union is required in order for a manufacturer to commercially distribute the product throughout the European Union. Additional local requirements may apply on a country-by-country basis. Outside of the European Union, regulatory approval would need to be sought on a country-by-country basis in order for us to market our Products.

Medical devices in Europe are classified into four primary categories. They are as follows:

● Non-invasive devices;

● Invasive medical devices;

● Active medical devices; and

●

Special Rules (including contraceptive, disinfectant, and radiological diagnostic medical devices)

Devices are further segmented into the classes noted below. In Vitro Diagnostic devices (IVDs) have their own classification scheme and while active implantable devices do not follow the same classification system as provided by the Medical Device Directive (MDD), they are subject to similar requirements as Class III devices:

●

Class I – Provided non-sterile or do not have a measuring function (low risk)

●

Class I – Provided sterile and/or have a measuring function (low/medium risk)

●

Class IIa (medium risk)

●

Class IIb (medium/high risk)

●

Class III (high risk)

We have a wholly-owned subsidiary in ~~Russia and have established a wholly-owned subsidiary in~~ Europe (Poland) for current product distribution. The Russian invasion of Ukraine on February 24, 2022 may impact the operation of our Russian subsidiary. Economic sanctions and inflation may have a negative impact. Further, the Russian government may take actions to inhibit the operations of companies which are 100% owned by U.S. companies.

Other Regulatory Requirements

Even after a device receives clearance or approval and is placed in commercial distribution, numerous regulatory requirements apply. These include:

●

establishment registration and device listing;

● QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing, risk management, production, control, supplier/contractor selection, complaint handling, documentation, and other quality assurance procedures during all aspects of the manufacturing process;

● labeling regulations that prohibit the promotion of products for uncleared, unapproved or “off-label” uses, and impose other restrictions on labeling, advertising, and promotion;

●

Medical Device Reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur;

●

voluntary and mandatory device recalls to address problems when a device is defective and could be a risk to health; and

●

corrections and removals reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health.

Also, the FDA may require us to conduct post-market surveillance studies or establish and maintain a system for tracking our Products through the chain of distribution to the patient level. The FDA enforces regulatory requirements by conducting periodic, unannounced inspections and market surveillance. Inspections may include the manufacturing facilities of our subcontractors.

Failure to comply with applicable regulatory requirements can result in enforcement actions by the FDA and other regulatory agencies. These may include any of the following sanctions or consequences:

●

warning letters or untitled letters that require corrective action;

●

fines and civil penalties;

●

unanticipated expenditures;

● delays in approving or refusal to approve future products; ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries;

● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries;

●

suspension or withdrawal of FDA clearance or approval;

●

product recall or seizure;

●

interruption of production;

●

operating restrictions;

●

injunctions; and

●

criminal prosecution.

18Our contract manufacturers, specification developers and some suppliers of components or device accessories, also are required to manufacture our Neurology Products in compliance with current good manufacturing practice requirements set forth in the QSR. The QSR requires a quality system for the design, manufacture, packaging, labeling, storage, installation and servicing of marketed devices, and it includes extensive requirements with respect to quality management and organization, device design, buildings, equipment, purchase and handling of components or services, production and process controls, packaging and labeling controls, device evaluation, distribution, installation, complaint handling, servicing, and record keeping. The FDA evaluates compliance with the QSR through periodic unannounced inspections that may include the manufacturing facilities of our subcontractors. If the FDA believes that any of our contract manufacturers or regulated suppliers are not in compliance with these requirements, it can shut down such manufacturing operations, require recall of our products, refuse to approve new marketing applications, institute legal proceedings to detain or seize products, enjoin future violations or assess civil and criminal penalties against us or our officers or other employees.

Our contract manufacturers, specification developers and some suppliers of components or device accessories, also are required to manufacture our Neurology Products in compliance with current good manufacturing practice requirements set forth in the QSR. The QSR requires a quality system for the design, manufacture, packaging, labeling, storage, installation and servicing of marketed devices, and it includes extensive requirements with respect to quality management and organization, device design, buildings, equipment, purchase and handling of components or services, production and process controls, packaging and labeling controls, device evaluation, distribution, installation, complaint handling, servicing, and record keeping. The FDA evaluates compliance with the QSR through periodic unannounced inspections that may include the manufacturing facilities of our subcontractors. If the FDA believes that any of our contract manufacturers or regulated suppliers are not in compliance with these requirements, it can shut down such manufacturing operations, require recall of our Products, refuse to approve new marketing applications, institute legal proceedings to detain or seize products, enjoin future violations or assess civil and criminal penalties against us or our officers or other employees.22

Health Insurance Portability and Accountability Act of 1996 and Similar Foreign and State Laws and Regulations Affecting the Transmission, Security and Privacy of Health Information

We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. The Health Insurance Portability and Accountability Act of 1996 or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their respective implementing regulations, imposes specified requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, defined as service providers of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, many state laws govern the privacy and security of health information in certain circumstances, many of which differ from HIPAA and each other in significant ways and may not have the same effect.

Foreign data privacy regulations, such as the EU Data Protection Directive (Directive 95/46/EC), the country-specific regulations that implement Directive 95/46/EC, and the EU General Data Protection Regulation (GDPR) also govern the processing of personally identifiable data ,and may be stricter than U.S. laws.

Fraud and Abuse Laws

In addition to FDA restrictions, there are numerous U.S. federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback laws and physician self-referral laws. Our relationships with healthcare providers and other third parties are subject to scrutiny under these laws. Violations of these laws are punishable by criminal and civil sanctions, including, in some instances, imprisonment and exclusion from participation in federal and state healthcare programs, including the Medicare, Medicaid and Veterans Administration health programs.

Federal Anti-Kickback and Self-Referral Laws

The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, receiving, offering or providing remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include anything of value, including such items as gifts, discounts, the furnishing of supplies or equipment, credit arrangements, waiver of payments and providing anything at less than its fair market value. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a review of all its relevant facts and circumstances. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of (or purchases, or recommendations related to) federal healthcare covered business, the Anti-Kickback Statute has been implicated and potentially violated.

The penalties for violating the federal Anti-Kickback Statute include imprisonment for up to five years, fines of up to $25,000 per violation and possible exclusion from federal healthcare programs such as Medicare and Medicaid. Many states have adopted prohibitions similar to the federal Anti-Kickback Statute, some of which do not have the same exceptions and apply to the referral of patients for healthcare services reimbursed by any source, not only by the Medicare and Medicaid programs. Further, the Anti-Kickback Statute was amended by the Patient Protection and Affordable Care Act, or PPACA. Specifically, as noted above, under the Anti-Kickback Statute, the government must prove the defendant acted “knowingly” to prove a violation occurred. The PPACA added a provision to clarify that with respect to violations of the Anti-Kickback Statute, “a person need not have actual knowledge” of the statute or specific intent to commit a violation of the statute. This change effectively overturns case law interpretations that set a higher standard under which prosecutors had to prove the specific intent to violate the law. In addition, the PPACA codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.

We plan to provide the initial training to providers and patients necessary for appropriate use of our technology either through our own educators or by contracting with outside educators that have completed an appropriate training course. Outside educators are reimbursed for their services at fair market value.

Noncompliance with the federal anti-kickback legislation could result in our exclusion from Medicare, Medicaid or other governmental programs, restrictions on our ability to operate in certain jurisdictions, and civil and criminal penalties.

Federal law also includes a provision commonly known as the “Stark Law,” which prohibits a physician from referring Medicare or Medicaid patients to an entity providing “designated health services,” including a company that furnishes durable medical equipment, in which the physician has an ownership or investment interest or with which the physician has entered into a compensation arrangement. Violation of the Stark Law could result in denial of payment, disgorgement of reimbursements received under a noncompliant arrangement, civil penalties, and exclusion from Medicare, Medicaid or other governmental programs. We believe that we have structured our provider arrangements to comply with current Stark Law requirements.

Nevertheless, a determination of liability under such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions.

Additionally, as some of these laws are still evolving, we lack definitive guidance as to the application of certain key aspects of these laws as they relate to our arrangements with providers with respect to patient training. We cannot predict the final form that these regulations will take or the effect that the final regulations will have on us. As a result, our provider and training arrangements may ultimately be found to be not in compliance with applicable federal law.

Federal False Claims Act

The Federal False Claims Act provides, in part, that the federal government may bring a lawsuit against any person whom it believes has knowingly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement or used a false record to get a claim approved. In addition, amendments in 1986 to the Federal False Claims Act have made it easier for private parties to bring “qui tam” whistleblower lawsuits against companies under the Federal False Claims Act. Penalties include fines ranging from $5,500 to $11,000 for each false claim, plus three times the amount of damages that the federal government sustained because of the act of that person. Qui tam actions have increased significantly in recent years, causing greater numbers of healthcare companies to have to defend a false claim action, pay fines or be excluded from Medicare, Medicaid or other federal or state healthcare programs as a result of an investigation arising out of such action.

There are other federal anti-fraud laws that that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

Additionally, HIPAA established two federal crimes in the healthcare fraud and false statements relating to healthcare matters. The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private payors. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from government sponsored programs. The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment.

Civil Monetary Penalties Law

In addition to the Anti-Kickback Statute and the civil and criminal False Claims Acts, the federal government has the authority to seek civil monetary penalties, or CMPs, assessments, and exclusion against an individual or entity based on a wide variety of prohibited conduct. For example, the Civil Monetary Penalties Law authorizes the imposition of substantial CMPs against an entity that engages in activities including, but not limited to: (1) knowingly presenting or causing to be presented, a claim for services not provided as claimed or which is otherwise false or fraudulent in any way; (2) knowingly giving or causing to be given false or misleading information reasonably expected to influence the decision to discharge a patient; (3) offering or giving remuneration to any beneficiary of a federal health care program likely to influence the receipt of reimbursable items or services; (4) arranging for reimbursable services with an entity which is excluded from participation from a federal health care program; (5) knowingly or willfully soliciting or receiving remuneration for a referral of a federal health care program beneficiary; or (6) using a payment intended for a federal health care program beneficiary for another use. Noncompliance can result in civil money penalties of up to $10,000 for each wrongful act, assessment of three times the amount claimed for each item or service and exclusion from the federal healthcare programs.

State Fraud and Abuse Provisions

Many states have also adopted some form of anti-kickback and anti-referral laws and a false claims act. We believe that we are in conformance to such laws. Nevertheless, a determination of liability under such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions.

Physician Payment Sunshine Act

Transparency laws regarding payments or other items of value provided to healthcare providers and teaching hospitals may also impact our business practices. The federal Physician Payment Sunshine Act requires most medical device manufacturers to report annually to the Secretary of Human Health Services financial arrangements, payments, or other transfers of value made by that entity to physicians and teaching hospitals. The payment information is made publicly available in a searchable format on a CMS website. Over the next several years, we will need to dedicate significant resources to establish and maintain systems and processes in order to comply with these regulations. Failure to comply with the reporting requirements can result in significant civil monetary penalties. Similar laws have been enacted or are under consideration in foreign jurisdictions.

U.S. Foreign Corrupt Practices Act

The U.S. Foreign Corrupt Practices Act, or FCPA, prohibits U.S. corporations and their representatives from offering, promising, authorizing or making corrupt payments, gifts or transfers to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business abroad. The FCPA also obligates companies whose securities are listed in the ~~United~~U.S. ~~States~~ to comply with accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. Activities that violate the FCPA, even if they occur wholly outside the ~~United States~~U.S., can result in criminal and civil fines, imprisonment, disgorgement, oversight, and debarment from government contracts.

21Recent Developments

~~Motion: Industry~~March ~~Overview~~2023 PPO

~~Piezoelectric motors~~On ~~are~~March ~~unique~~15, ~~because~~2023 ~~they~~(the ~~combine~~“Effective Date”), the ~~key~~Company ~~benefits~~consummated ~~of a piezo motor with~~ the ~~price~~initial ~~point~~closing of ~~traditional~~a ~~precision~~private ~~direct~~placement ~~current or~~offering ~~DC motors. Unlike~~ (the ~~classic~~“March DC2023 orPPO”) ~~stepper~~whereby ~~motors,~~ the Company ~~versatile~~sold ~~piezo~~to ~~rotary~~three ~~and~~accredited ~~linear~~investor ~~motion~~(the ~~motors~~“Holders”), ~~contain~~for ~~very~~an ~~few~~aggregate ~~parts~~purchase ~~enabling economical~~price ~~manufacturing~~of ~~volume~~$200,000, ~~yielding~~(i) a50% ~~stable~~Original ~~and reliable final result. Piezo technology is inherently non-magnetic which enables~~Issue ~~motor~~Discount ~~designs~~Senior ~~for~~Secured ~~specialized~~Convertible ~~applications~~Debentures ~~where~~in ~~traditional~~the DCprincipal ~~motors~~amount ~~cannot~~of be$400,000; ~~used. Piezo motors are also immune from electromagnetic (“EM”)~~ and ~~radio frequency~~ (~~“RF”~~ii) ~~interference~~119,976 ~~and~~warrants ~~generate~~to nopurchase ~~emissions~~shares ~~which~~of ~~can~~common stock ~~aid~~of ~~original~~the ~~equipment~~Company, ~~manufacturer (“OEM”)~~par ~~product~~value ~~compliance~~$0.001 ~~and~~per ~~reduce~~share or(the ~~eliminate~~“Common ~~shielding costs~~Stock”).

~~We believe that our propriety~~The debentures ~~piezo~~are ~~technology may be up to 1~~due,~~000~~ ~~times~~subject ~~more precise and up~~ to ~~100 times faster to respond than~~ the DCterms ~~competitors. A typical rotary stepper motor might be configured to make up to 51~~therein,~~200~~ ~~steps~~June ~~in each rotation. By comparison~~10, ~~our~~2023 ~~rotary~~unless ~~motor~~extended ~~may~~pursuant ~~make over 600,000 steps~~ to ~~complete a full revolution and this drives a smoother and more precise motion. We manufacture compact motors with our smallest being~~ the ~~length~~terms ~~and width of a thumbnail~~thereunder.

~~Piezo~~The warrants shall be ~~Motion~~exercisable ~~currently~~at ~~serves~~any ~~industries~~time ~~such~~on asor after the earlier of (i) June 10, 2023; or (ii) the closing of a registered offering of the Company’s securities for aggregate gross proceeds to the Company of at least $5,000,000, resulting in the listing for trading of the Common Stock on the NYSE American or The Nasdaq Capital Market (the “Qualified Offering”), and on or prior to on or prior to 5:00 p.m. (New York City time) on September 14, 2029 (if no Qualified Offering has been consummated occurred on or prior to the maturity date of the debentures) or the date that is five years and six months following the closing of the Qualified Offering.

● Medical Technology (“MedTech”)

● Pharmaceutical

● Aerospace (including Drones)

● Industrial Automation

● Autonomous Vehicles

● Laser and Photonics

Piezo Motion is a provider of piezo motor technology with significant investment in research and development of affordable piezoelectric motors to meet, and exceed, the needs of today's global markets. The company is committed to the development of innovative piezoelectric technology and motion products that enhance their functionality in a multitude of applications. We work with startups, OEMs, research institutions, and industrial companies from around the world empowering the visionaries behind their products.

Precision Motion Market

We compete within the domestic and global precision motor and motion control industries which are expected to grow at a CAGR of 4.9% from 2021 to 2025 to an estimated $2.4B by 2025.The precision motion market is defined primarily by costly, high-precision piezoelectric motors and lower-end DC precision motors. These are the motors that guide lasers, satellites, Mars rovers, and small cameras, among other things. This market continues to value more compact, precise, efficient motors to address the trends of miniaturization and portability. These motors are used across many industries, including aerospace, robotics, manufacturing, drones, telecommunications, and the medical field. We believe that we are uniquely positioned with our patented technology to sell piezo precision at a price point that can compete with precision DC motors.

Medical Technology Market

The primary focus for our piezoelectric motors remains on the medical technology, or MedTech, market. Use cases for precision motion products in this space vary from lab equipment to surgical robotics to drug delivery systems, to give a few examples. The MedTech industry is an optimal target because it increasingly requires higher precision than DC motors can offer, low electromagnetic interference, and often an affordable price point to reduce system costs. Our products’ unique advantages play well into this space.

Micro Dosing & Fluidics Market

The market for microinjectors and micropumps is growing significantly with a trend in the medical field towards smaller, sustained dosing and testing of higher concentrations of medicines. This market is expected to increase from $1.8B worldwide in 2021 to $3.2B worldwide in 2025, growing at an estimated 16% CAGR during this period. Currently, labs buy separate microinjector and continuous flow instruments due to the limitations in the products available in the marketplace today. Our Micro Dosing Pump can fulfill both of these applications at once, saving bench space in labs and simplifying lab operations.

Motion: Intellectual Property

Patents and trademarks are significant to our business to the extent that a Product or an attribute of a Product represents a unique design or process. Patent protection restricts competitors from duplicating unique designs and features. To protect our proprietary secrets and competitive technologies, we have obtained and are seeking to further obtain patent, trade secret, trademark and other intellectual property protection on our Products whenever appropriate. As of the date of this Annual Report on Form 10-K, the Company has secured a total of fourteen (14) U.S. nonprovisional patents and nine (9) foreign patents including European, Japanese and Chinese patents; these patents all relate to the Company’s piezoelectric technologies. We have one European patent application pending titled “Liner Piezoelectric Actuator on Rail System” (Application No. 18761639).

In September of 2015 we entered into a License Agreement with Parker Hannifin Corporation in which we granted a worldwide license under our Patents for certain pneumatic, gas and fluid control devices for sale into the pneumatic industrial factory automation market, medical equipment gas/liquid control market and instrumentation gas/liquid control market. Under the License Agreement we received an initial fee of two million dollars ($2,000,000.00) which was paid in two annual installments in 2015 and 2016. To-date we have not received any additional royalties from Parker Hannifin -under the License Agreement.

Motion: Market Dynamics

Driver: Trends toward miniaturization and portability

Creating increasingly small and mobile devices requires not just smaller and more energy-efficient motors within those devices but also more precise machinery to manufacture said devices.

According to Machine Design, the need for miniature motors is itself being expanded by trends towards the invent of collaborative robotic applications, robustness and extended life, safety and analytics through encoders and other feedback devices, and autonomy through multi-axis control. Smaller drones, smaller assembly lines, more complex smartphones and cameras, and more precise robotics all push the demand for miniaturized motors forward.

Portability has long been a trend for convenience, but an interconnected global world, increasingly complex robotic systems, and increasingly mobile workforce all speak to the need for micro-sized motors to be more energy and weight efficient than before. According to an article from ISA (International Society of Automation), increased human-robotics interactions and systems is a primary driver behind the trend of compact portability for robotics and motion systems. These trends are likely to support market growth for our products.

Opportunity: Increased needs for small precision motion systems

To drive progress in current hardware systems and robotics, and to keep pace with software and analytical developments, we believe increased motion precision is needed. The World Economic Forum estimates that by 2025 humans will create 463 exabytes of data each day globally. For context, one exabyte is equal to 1 million terabytes. This predicted influx of data creation data will likely drive more precise analytics, predictions, and recommendations – but to drive change in the physical world we believe will require motion systems capable of such high precision.

Piezoelectric motors are generally more precise than DC motors so they stand to benefit from demand for greater precision. The primary historic limitation of piezoelectric motion for precision applications has been their cost.

Challenge: The cost of piezoelectric motion systems

Piezoelectric systems can often cost 10x as much as a precision DC motor of a similar size. For most precision use cases outside of the highest-cost, highest-precision applications, precision DC motors are used today. We believe that piezoelectric motion can be far more affordable while still maintaining advantages in precision, efficiency, simplicity, and weight compared to precision DC motors.

We believe that our patented technology makes us unique in this ability and will help us maintain pricing levels comparable to precision DC motors while offering piezoelectric motor performance.

Motion: Competition

Our products and services compete against a range of competitors spanning large, established manufacturers with many product lines to startups with only a few employees doing custom projects. Most of the competitors we directly compete with sell either piezoelectric motors at a higher price point than us or precision DC motors at a similar price point but with lower precision and efficiency. Our indirect competitors sell other types of small, precise motors or motion systems that may be able to fulfill some of the same use cases outside of the target focus of our products. Meanwhile our Micro Dosing Pump competes for sale to labs and researchers against microinjectors and micropumps since our product fulfills the use cases of both current product categories.

The trends of miniaturization and portability are putting pressure on manufacturers of motion systems to design smaller, more efficient, and more precise motors. In addition, the manufacturing systems and robotics used to serve these trends also need increasingly precise motors. These trends play well into the advantages of piezoelectric motors, which have traditionally come at a cost point prohibitive to many use cases outside of advanced aerospace, optics, and defense industries. When piezoelectric motors are too expensive, precision DC motors, with poorer efficiency and precision, are the general solution. Now we have invented piezoelectric motion systems that are significantly more affordable than traditional piezoelectric systems while maintaining the unique advantages of piezoelectric technology. There are a couple of other small manufacturers attempting more affordable piezoelectric motors as well but most focus on the high-end, ultra-precise applications piezoelectric motors are traditionally known for.

Motion: Market Application

Our piezoelectric motion devices have many applications. Our primary markets are life sciences, MedTech, and lab instruments given those markets’ focus on precision and need for miniaturization. We believe devices in these fields can benefit from our technology: such potential applications include infusion MRI pumps, syringe pumps, wearable drug dispensers, handheld drug dispensers, surgical robotics, microscopes and micropositioning systems, and diagnostic testing equipment.

In addition to the life sciences industry, our motors have market applications in a wider set of industries, some of which have already started to use our motors. These secondary target markets include the advanced manufacturing, defense, laser/photonics/optic, semiconductor, and aerospace industries.

Motion: Sales and Marketing

Our linear and rotary motion products are commercially available directly from Piezo Motion or from one of our worldwide distribution partners. We market our solution though an integrated digital marketing program and in person trade shows and conferences. Our partners market our products directly to their customers in their local markets. Our sales strategy it focused on OEM product manufactures where size, precision and scale are key characteristics of their product needs. We provide resources online that allow OEM manufactures to learn and incorporate our motor into their product designs. We offer evaluation kits direct from our website and though our partner network.

Motion: Manufacturing, Supply and Quality Assurance

Our assembly area consists of a localized storeroom, a site for fabrication, subassembly manufacturing, final assembly, and test/quality verification. We continue to look to enhance our processes by focusing on automation and lean initiatives.

Materials from suppliers is routinely inspected for quality and conformance against documented specifications. We are in the process of securing certification for ISO 9001 quality management systems.

Our piezoceramics are currently sourced from two suppliers, one is located in US, the other is overseas.

The vast majority of all other components, including electronic components, used in the assembly of our motors and associated electronics are available off-the-shelf from various suppliers sourced within the U.S.

We believe that the suppliers we currently utilize or that we may utilize in the future have sufficient capacity to meet our launch requirements and are able to scale up their capacity relatively quickly as demand for our product grows. We believe that with increased future demand, our per unit costs will decrease materially. Our suppliers meet the quality management systems for ISO 9001 or higher. We plan to audit our suppliers periodically to ensure conformity with the specifications, policies and procedures for our devices. We have also identified capable second source suppliers in the event of disruption from any of our primary vendors.

Motion: Research and Development

Our research and development activities are performed in the United States and at our subsidiary location in Kyiv, Ukraine where we have a small team of highly trained and experienced scientists and engineers employed on a full-time basis. We are also working with subcontractors in developing specific components of our technologies including software. Since the Russian invasion of Ukraine on February 24, 2022, our personnel in Ukraine have not been able to work from the office. They are working remotely and may not be able to return to an office location in the foreseeable future.

The primary objective of our research and development program is to advance the development of our existing and future Products and Technology. This work includes studies focused on topics such as:

● Solid-state physics of piezoelectric materials

● Materials Research

● Electromechanical properties of piezoceramic materials

● Resonance and frequency response profiling of piezoceramic materials

● Piezoelectric motor and actuators concept and prototyping

● Thermodynamic relationships

● Impedance analyzer characterization of piezoelectric properties

● Development of electronic hardware for piezo resonator excitation

● Development of firmware and software algorithms for piezo motor control

● Intellectual property development

The debentures contain mandatory and voluntary conversion features as follows:

(a) Mandatory Conversion.

In the event a Qualified Offering is consummated prior to June 10, 2023, the debentures automatically convert into shares of Common Stock, immediately upon the occurrence of a Qualified Offering. The exercise price per share of Common Stock pursuant to the warrant shall mean, in the case of a mandatory conversion, the price of the Common Stock (or unit, if units are offered in the Qualified Offering) in the Qualified Offering.

(b) Voluntary Conversion.

The Holders of the debentures have the right (subject to the conversion limitations set forth therein) from time following the maturity date and prior to a mandatory conversion to convert all or any part of the outstanding and unpaid principal and interest then due under the debentures into fully paid and non-assessable shares of Common Stock. The exercise price per share of Common Stock pursuant to the warrant shall mean, in the case of a voluntary conversion, the lower of (i) $0.25 per share or (ii) 75% of the average of the VWAP of the Company’s Common Stock during the ten (10) Trading Day period immediately prior to the maturity date.

In connection with the March 2023 PPO, on the Effective Date, the Company and the Holders entered into a letter agreement (the “March 2023 Letter Agreement”) whereby the company agreed, in order to induce the Holders to participate in the March 2023 PPO, to (i) modify that certain security agreement, dated June 10, 2022 (the “Security Agreement”) entered into by and among the Company, the Company’s subsidiaries and the investors in the Company’s June 2022 private placement offering (the “June 2022 PPO Offering”) to provide that the indebtedness reflected by the debentures and the Company’s obligations with respect thereto are included under the Security Agreement and covered by the security interest granted thereby; and (ii) provide the opportunity for all other participants in the June 2022 PPO Offering to participate in the March 2023 PPO.

Pursuant to the Security Agreement, the Company agreed to grant each of the Holders a security interest in all of the assets of the Company, to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the debentures.

On March 31, 2023, the Company consummated the second closing of the March 2023 PPO whereby the Company sold to the Holders, for an aggregate purchase price of $100,000, (i) 50% Original Issue Discount Senior Secured Convertible Debentures in the principal amount of $200,000; and (ii) 59,988 warrants to purchase shares of Common Stock.

Reverse Stock Split

On May 19, 2022, the Board approved the granting of discretionary authority to the Board, at any time or times for a period of up to twelve months from the Record Date, to adopt an amendment (the “Amendment”) to the Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”), to effect a reverse stock split (the “Reverse Stock Split”) with a ratio within the range of 1-for-10 to 1-for-100 (the “Reverse Stock Split Ratio”).

On June 16, 2022, the Company received a written consent in lieu of a meeting by the holders of 62.73% of the voting power of our Common Stock (the “Majority Stockholders”) authorizing the Reverse Stock Split and the filing of the Amendment.

On January 31, 2023, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Nevada to effectuate a 1-for-85 reverse stock split of the outstanding Common Stock and treasury stock of the Company. The Reverse Stock Split became effective at the commencement of trading of our Common Stock on February 3, 2023.

Increase in Authorized Shares

On May 21, 2022, the Board authorized the increase of the Company’s shares of authorized Common Stock from 200,000,000 to 750,000,000 pursuant to the Amendment (the “Increase in Authorized Shares”).

On June 16, 2022, the Company received a written consent in lieu of a meeting by the Majority Stockholders authorizing the Increase in Authorized Shares. The Increase in Authorized Shares shall become effective upon the filing of a certificate of amendment with the Secretary of State of the State of Nevada. We filed the certificate of amendment on August 12, 2022.

Adoption of the 2022 Equity and Incentive Plan

On May 21, 2022, the Board approved, authorized, and adopted the Brain Scientific 2022 Equity and Incentive Plan (the “2022 Plan”) and certain forms of ancillary agreements to be used in connection with the issuance of stock and/or options pursuant to the 2022 Plan. The 2022 Plan provides for the issuance of up to 12,500,000 shares of Common Stock through the grant of non-qualified options (the “Non-qualified Options”), incentive options (the “Incentive Options” and together with the Non-qualified Options, the “Options”) and restricted stock (the “Restricted Stock”) restricted stock units, stock appreciation rights (“SARs”) and other equity-based awards to directors, officers, consultants, attorneys, advisors and employees.

On June 16, 2022, the Company received a written consent in lieu of a meeting by the Majority Stockholders approving the adoption of the 2022 Plan.

PPO Debenture/Warrant Offering

On June 13, 2022, the Company entered into that certain securities purchase agreement (the “PPO SPA”) with thirteen accredited investors (the “PPO Holders”) pursuant to which the Company and the PPO Holders consummated a private placement offering (the “June 2022 PPO Offering”) whereby the PPO Holders purchased from the Company, for an aggregate purchase price of $5,110,000 (the “Purchase Price”) (i) 10% Original Issue Discount Senior Secured Convertible Debentures in the aggregate principal amount of $5,659,500 (the “PPO Debentures”); and (ii) warrants (the “PPO Warrants”) to purchase 222,311 shares of Common Stock.

The PPO Debentures are due, subject to the terms therein, 12 months from their date of issuance unless extended pursuant to the terms thereunder (the “Maturity Date”). The PPO Debentures contain mandatory and voluntary conversion features as follows:

In the event a Qualified Offering (as defined below) is consummated prior to the Maturity Date of the PPO Debentures, the PPO Debentures automatically convert into shares of Common Stock, immediately upon the occurrence of such offering (the “Mandatory Conversion”). The conversion price per share of Common Stock pursuant to the PPO Debentures means, in the case of a Mandatory Conversion, the lesser of (i) $21.25 per share and (ii) 70% of the offering price of the securities in a Qualified Offering. In addition, the PPO Holders shall have the opportunity to force redemption of up to 45% of principal amount, together with accrued interest (but excluding OID) in connection with a Qualified Offering (the “PPO Redemption”). For these purposes, a registered offering of our securities for aggregate gross proceeds to us of at least $5,000,000, resulting in the listing for trading of the Common Stock on the NYSE American or The Nasdaq Capital Market shall be deemed a “Qualified Offering” . See “Letter Agreements with the PPO Holders” above for agreements reached with the holders of PPO Debentures with respect to the PPO Redemption provisions.

The holders of the PPO Debentures have the right from time to following the Maturity Date and prior to a Mandatory Conversion to convert all or any part of the outstanding and unpaid principal and interest then due under the PPO Debentures into fully paid and non-assessable shares of Common Stock (the “Voluntary Conversion”). The conversion price per share of Common Stock pursuant to the PPO Debentures means, in the case of a Voluntary Conversion, the lower of (i) $21.25 per share or (ii) 75% of the average of the volume weighted average price (“VWAP”) of the Common Stock during the ten-trading day period immediately prior to the applicable conversion date.

The PPO Warrants are exercisable for a period of five years and six months commencing upon the earlier of (i) the Maturity Date or (ii) the closing of a Qualified Offering. The exercise price of the PPO Warrants is (i) the Qualified Offering price per share, or (ii) if no Qualified Offering has occurred prior to the Maturity Date then the lower of (i) $21.25 per share or (ii) 75% of the average of the VWAP of the Company’s Common Stock during the ten (10) Trading Day period immediately prior to the Maturity Date (on an as adjusted basis giving effect to any splits, dividend and the like during such ten (10) Trading Day period). See “Letter Agreements with the PPO Holders” above for agreements reached with the holders of PPO Warrants with respect to changes to the exercise price of the PPO Warrants.

The PPO Warrants contain a cashless exercise provision if at any time after 180 days following the closing of the Qualified Offering there is no effective registration statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder. The Company has agreed to use its commercially reasonable efforts to cause the filing of a registration statement with the SEC covering the resale of the shares issuable upon conversion of the PPO Debentures and exercise of the PPO Warrants at the same time as the Qualified Offering and shall use its commercially reasonable efforts to cause such registration statement to become effective at the time of the Qualified Offering. The Company shall cause any registration statement filed pursuant to this section to remain effective for a period of at least twelve (12) consecutive months after the date that the registration becomes effective.

In connection with the June 2022 PPO Offering, our subsidiaries Piezo Motion Corp., and Memory MD, Inc., executed guarantees in favor of the PPO Holders, under which they have jointly and severally, unconditionally, and irrevocably, guaranteed to the PPO Holders the prompt and complete payment and performance when due of our obligations pursuant to the securities purchase agreements executed in connection with the June 2022 PPO Offering.

In connection with the June 2022 PPO Offering, we also entered into that certain Security Agreement by and among us, each of the PPO Holders, Piezo Motion Corp., and Memory MD, Inc., whereby we granted each of the PPO Holders a security interest in all of our assets to secure the prompt payment, performance and discharge in full of all of the our obligations under the PPO Debentures and the obligations of Piezo Motion Corp., and Memory MD, Inc., under the Guarantee.

Additionally, in connection with the June 2022 PPO Offering, holders of certain of our convertible notes (the “Prior Convertible Notes”) converted the Prior Convertible Notes (including principal and interest) into an aggregate of 641,606 shares of Common Stock based on a conversion price of $21.25 per share. To incentivize such noteholders to convert, we increased the principal amount of the Prior Convertible Notes by $1,175,741 resulting in the approximate aggregate principal amount of $12,933,155 being converted into equity, plus interest of $700,988. In connection with their original investment, these holders were entitled to warrants (the “Original Warrants”) based on 50% coverage of their original investment amount. On November 15, 2022, the Company issued a total 276,648 of Original Warrants to such holders. The Original Warrants are for a term of four years with an exercise price of $21.25 per share. The holders of the Prior Convertible Notes and Original Warrants also agreed to waive and forgo the rights to the registration of the securities underlying the Prior Convertible Notes and Original Warrants. See also “Letter Agreements with Holders of Prior Convertible Notes” above.

Russian Invasion of Ukraine

On February 24, 2022, Russia invaded Ukraine. Our Piezo research and development group in Kyiv has not been able to consistently work from the offices since that time. The team from Kyiv work from the office and remotely. We do not know when they will have consistent access to the office. Further, we have engineering resources capable of performing the work done in Kyiv from the United States.

In 2019 and until the second quarter of Fiscal 2022, MMDR acted as a distributor of third-party medical devices in Russia, which resulted in substantially all of our revenue for 2020 and 2021. The Russian invasion of Ukraine in February 2022 negatively impacted the operation of MMDR. With the uncertainty raised due to the continued Russian invasion of Ukraine, and with such operations no longer part of the Company’s business plan, the Company began winding down the operations of MMDR. Accordingly, during the second quarter of Fiscal 2022, MMDR satisfied its last distribution obligations and laid off all of its employees. Since then, no work has been conducted by MMDR, and the Company has no ongoing operations or employees in Russia. MMDR has no assets or liabilities and is currently a legal entity, waiting to be dissolved by Russian authorities, which we expect will occur during 2023. The Company does not currently sell, import, or export any of its products in, to or from Russia, nor does it plan to engage in such activities in the future. The Office of Foreign Assets Control (OFAC) issues advisories to the public on important issues related to the sanctions programs it administers, including with regards to the Ukraine/Russia related sanctions program. The Company has been monitoring the situation, and none of the customers, vendors and distributors the Company previously worked with in Russia, is currently being sanctioned by the U.S. government, nor were any of its former employees. The Company continues to maintain full compliance with all U.S. Federal laws with regards to the situation and it does not expect things to change in that regard.

Employees

As of March 31, ~~2022~~2023, we had ~~twenty-eight~~eleven (11) employees, none of whom are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our ~~employee~~employees to be satisfactory.

ITEM 1A – RISK FACTORS

Investing in our common stock involves a high degree of risk. Before you invest in our common stock, you should carefully consider the following risks, as well as general economic and business risks, and all of the other information contained in this Report. Any of the following risks could harm our business, operating results and financial condition and cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. When determining whether to invest, you should also refer to the other information contained in this Report including our financial statements and the related notes thereto.

Risks Relating to our Business

We are a developmental stage medical device company and have ~~incurred~~a history of significant operating losses; ~~since~~we ~~inception~~expect ~~and~~to ~~cannot~~continue ~~assure~~to ~~you~~incur ~~that~~operating losses, and we ~~will~~may ~~ever~~never achieve or ~~sustain~~maintain profitability.

We are a development stage company and have incurred losses from inception and had an accumulated deficit of $34,622,781 as of December 31, 2022, and a working capital deficit of $6,111,023 as of December 31, 2022. We had an accumulated deficit of $22,278,923 as of December 31, 2021, and ~~had~~ a working capital deficit of $23,~~771~~211,~~570~~735 as of December 31, 2021. We expect to continue to incur significant expenses and ~~increasing~~increase operating and net losses for the foreseeable future. To date, we have financed our operations primarily through debt and equity financings. To date, our primary activities have been limited to, and our limited resources have been dedicated to, performing business and financial planning, raising capital, recruiting personnel, negotiating with business partners and the licensors of our intellectual property and conducting development activities, including the commercialization of our products.

We ~~believe that to fully implement our business strategy we need to, among other things, raise or generate revenues of approximately $15.0 million, or some combination thereof. We~~ have never been profitable and do not expect to be profitable in the foreseeable future. Any profitability in the future will be dependent upon the successful development of our business model, of which we can give no assurance of success. We expect our expenses to increase as we pursue our objectives. The extent of our future operating losses and the timing of profitability are highly uncertain, and we expect to continue incurring significant expenses and operating losses over the next several years. Our prior losses have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital. Any additional operating losses may have an adverse effect on our stockholders' ’ equity, and we cannot assure you that we will ever 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 would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our development efforts, obtain regulatory approvals or continue our operations. Accordingly, we are a highly speculative venture involving significant financial risk.

We ~~are~~have agenerated ~~developmental~~limited ~~stage~~revenues ~~company~~to ~~and~~date and substantially all of our revenues have ~~not~~been ~~yet~~generated ~~had~~from aour ~~history~~Russian ofsubsidiary, ~~generating~~which ~~revenue~~we are winding down.

AsWe have generated only limited revenues from our two product lines. For the years ended December 31, 2022 and 2021, Brain Scientific Inc. and Piezo Motion Corp had a combined ~~development~~$214,564 and $265,747 in revenues, respectively. MMDR, previously operating as a distributor of third-~~stage~~party ~~entity~~medical devices, accounted for 83.16% and 83.25% of all such revenues for the ~~Company~~years ~~has~~ended ~~not~~December ~~generated~~31, ~~significant~~2022 and 2021, respectively. Piezo Motion Corp had $23,504 and $38,310 in revenues ~~from~~(10.96% ~~its~~and ~~two~~14.42%) ~~Product~~and ~~lines~~Memory MD US had $12,628 and $6,194 (5.89% and 2.33%) of the revenues generated in fiscal 2022 and 2021, respectively. The ~~Neurocap~~NeuroCap™ and NeuroEEG™ are both ready for commercial availability within our Neurology Products. The Blue Series, Imperial Series and engineered customized motors are also ready for commercial availability within our Motion Products. In 2022, manufacture of the ~~Neurocap~~NeuroCap™ has started at our outsourced manufacturing partner. Our Lakewood Ranch office iscan handle ~~capable of handling~~ the manufacture of the Motion Products for the foreseeable future. Distribution partners are in place for both ~~Products~~products.

~~If we do not gain the market acceptance for either the Neurology or Motion Products which we anticipate, we will not be capable of generating the revenues required for sustaining our business.~~29

26If we do not gain the market acceptance for either the Neurology or Motion Products, we will not be capable of generating the revenues required for sustaining our business.

In 2019, we commenced acting as a distributor of third-party medical devices in Russia, which resulted in substantially all of our revenue for 2020 and 2021. ~~While~~The weRussian ~~intend~~invasion toof ~~continue~~Ukraine ~~the~~in ~~sale~~February of2022 ~~third-party~~negatively ~~medical~~impacted ~~devices,~~the weoperation doof ~~not~~MMDR. ~~intend~~With ~~for~~the ituncertainty toraised bedue ~~our~~to ~~primary~~the ~~source~~continued Russian invasion of ~~revenue~~Ukraine, ~~in the long-term~~ and ~~expect~~with tosuch ~~curtail~~operations orno ~~cease~~longer ~~this~~part ~~line~~ of ~~operations~~the ~~as,~~Company’s ifbusiness ~~and~~plan, ~~when~~the weCompany ~~commence~~began ~~generating~~winding ~~material,~~down the ~~recurring~~operations ~~revenues~~of ~~from our~~MMDR. ~~Products~~Accordingly, ofduring ~~which~~the wesecond ~~can~~quarter ~~give~~of noFiscal ~~assurance.~~2022, WeMMDR ~~also~~satisfied ~~can~~its ~~give~~last nodistribution ~~assurance~~obligations ~~that~~and ~~any~~laid off ~~revenue~~all weof ~~generate~~its ~~from~~employees. soSince ~~acting~~then, asno awork ~~distributor of~~has ~~third-party~~been ~~medical~~conducted ~~devices~~by ~~will continue~~MMDR, ~~will~~and bethe ~~material~~Company orhas ~~will~~no beongoing ~~sufficient~~operations toor ~~enable~~employees usin toRussia. MMDR ~~continue~~has ~~our~~no ~~operations.~~assets ~~The~~or ~~Russian invasion~~liabilities ofand ~~Ukraine~~is oncurrently ~~February~~a 24legal entity, ~~2022~~waiting ~~may~~to ~~impact~~be ~~the~~dissolved ~~operation~~by ofRussian ~~our~~authorities, ~~Russian~~which ~~subsidiary.~~we ~~Economic~~expect ~~sanctions~~will occur ~~and~~during ~~inflation~~2023. ~~may~~The ~~have a~~Company ~~negative~~does ~~impact.~~not ~~Further~~currently sell, ~~the~~import, ~~Russian~~or ~~government~~export ~~may~~any ~~take~~of ~~actions~~its products in, to ~~inhibit~~or ~~the~~from ~~operations~~Russia, ofnor ~~companies~~does ~~which~~it ~~are~~plan to ~~100%~~engage ~~owned~~in bysuch Uactivities in the future.~~S. companies,~~

Investors are subject to all the risks incident to the creation and development of a new business and each investor should be prepared to withstand a complete loss of his, her or its investment. Furthermore, the accompanying financial statements have been prepared assuming that we will continue as a going concern. We have not emerged from the development stage and may be unable to raise further equity. These factors raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company has limited experience in medical device and piezoelectric motor development and commercialization. Our ability to become profitable depends primarily on: our ability to develop our ~~Products~~ products, our successful completion of all necessary pre-clinical testing and clinical trials on such ~~Products~~products, our ability to obtain approval for such ~~Products~~products and, if approved, successfully commercialize such ~~Products~~products, our ongoing research and development efforts, the timing and cost of clinical trials, our ability to identify personnel with the necessary skill sets or enter into favorable alliances with third-parties who can provide substantial capabilities in clinical development, regulatory affairs, sales, marketing and distribution and our ability to obtain and maintain necessary intellectual property rights to such ~~Products~~products. Our limited experience in piezoelectric motor and medical device development may make it more difficult for us to complete these tasks.

Even if we successfully develop and market our ~~Products~~products, we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations and cause you to lose all of your investment. Because we are subject to these risks, you may have a difficult time evaluating our business and your investment in our Company.

Our ability to continue our operations requires that we raise additional capital, and our operations could be curtailed if we are unable to obtain the additional funding as or when needed. As a result, our registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements included in this ~~Annual Report~~filing. We will need to raise substantial additional ~~funds~~ funds in the future, and these funds may not be available on acceptable terms or at all. A failure to obtain this necessary capital when ~~needed~~ needed could force us to delay, limit, scale back or cease some or all operations.

Upon the completion of the audit of our financial statements for the year ended December 31, ~~2021~~2022, we concluded there was substantial doubt about our ability to to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph regarding this uncertainty in its report on those financial statements.

The continued growth of our business, including the development, regulatory approval and commercialization of our ~~Products~~products, will significantly increase our expenses going forward, regardless of our revenues. As a result, we are required to seek substantial additional funds to continue our business. Our future capital requirements will depend on many factors, including:

● the cost of developing our ~~Products~~products;

27● obtaining and maintaining regulatory clearance or approval for our products;

● ~~obtaining~~the ~~and~~costs ~~maintaining~~associated ~~regulatory~~with ~~clearance~~commercializing ~~or approval for~~ our ~~Products~~products;

● the costs associated with commercializing our Products;

●

any change in our development priorities;

● the revenue generated by sales of our ~~Products~~products, if approved;

●

the revenue generated by sales of third-party medical devices;

● the costs associated with expanding our sales and marketing infrastructure for commercialization of our ~~Products~~products, if approved;

● any change in our plans regarding the manner in which we choose to commercialize any approved ~~Product~~product in the United States or internationally;

●

the cost of ongoing compliance with regulatory requirements;

●

expenses we incur in connection with potential litigation or governmental investigations;

●

the costs to develop additional intellectual property:

●

anticipated or unanticipated capital expenditures; and

●

unanticipated general and administrative expenses.

We believe our existing cash and cash equivalents, without raising additional capital or generating additional revenues, is insufficient to fund our operating expenses for the foreseeable future. We expect to seek additional capital from public or private offerings of our capital stock, borrowings under credit lines, if available, or other sources.

We may not be able to raise additional capital on terms acceptable to us, or at all. Any failure to raise additional capital could compromise our ability to execute on our business plan, and we may be forced to liquidate our assets. In such a scenario, the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.

If we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. In addition, if we raise additional funds through collaborations, licensing, joint ventures, strategic alliances, partnership arrangements or other similar arrangements, it may be necessary to relinquish valuable rights to our potential future products or proprietary technologies or grant licenses on terms that are not favorable to us.

The amount of future financing which we may require will depend on several factors, many of which are beyond our control. Our results of operations, financial condition and stock price are likely to be adversely affected if our funding requirements increase or are otherwise greater than we expect.

Our future funding requirements will depend on many factors, including, but not limited to:

	●	the testing costs for our product candidates and other development activities conducted by us directly, and our ability to successfully conclude the studies and activities and achieve favorable results;

	●	our ability to attract future strategic partners to pay for or share costs related to our product development efforts;

	●	the costs and timing of seeking and obtaining regulatory clearance and approvals for our product candidates;

	●	decisions to hire additional scientific, engineering or administrative personnel or consultants;

	●	our ability to manage administrative and other costs of our operations; and

	●	the presence or absence of adverse developments in our research program.

If any of these factors cause our funding needs to be greater than expected, our operations, financial condition, ability to continue operations and stock price may be adversely affected.

Our future cash requirements may differ significantly from our current estimates.

Our cash requirements may differ significantly from our estimates from time to time, depending on a number of factors, including:

	●	the costs and results of our development testing and clinical studies regarding our product candidates;

	●	the time and costs involved in obtaining regulatory clearance and approvals;

	●	the speed of product development at customers in which motors are used;

	●	whether we are able to obtain funding under future licensing agreements, strategic partnerships, or other collaborative relationships, if any;

	●	the costs of compliance with laws, regulations, or judicial decisions applicable to us; and

	●	the costs of general and administrative infrastructure required to manage our business and protect corporate assets and shareholder interests.

If we fail to raise additional funds on a timely basis, we will need to scale back our business plans, which would adversely affect our business, financial condition, and stock price, and we may even be forced to discontinue our operations and liquidate our assets.

COVID-19 continues to evolve and has the potential to disrupt business United States and many other parts of the world and may continue to adversely affect our business operations, supply chains, employee availability, financial condition, liquidity and cash flow for an extended period of time.

COVID-19 has receded as a major disruption of business operations. However, if the virus continues to mutate, a risk exists of more shut-downs or disruption of business operations and supply chains. It is impossible to predict the effect and ultimate impact of the COVID-19 pandemic as the situation continues to evolve.

Ongoing significant reductions in business related activities could result in further loss of sales and profits, as well as other material adverse effects. The extent of the impact of COVID-19 worldwide on our business, financial results, liquidity and cash flows will depend largely on future developments, which are highly uncertain and cannot be predicted.

28Quality problems with, and product liability claims in connection with our products could lead to recalls or safety alerts, harm to our reputation, or adverse verdicts or costly settlements, and could have a material adverse effect on our financial condition and business operations.

Quality ~~problems~~is ~~with,~~extremely important to us and our customers due to the serious and costly consequences of product ~~liability~~failure and our business exposes us to potential product ~~claims~~liability risks that are inherent in ~~connection~~the design, manufacture, and marketing of our products. Component failures, manufacturing defects, design flaws, off-label use, or inadequate disclosure of product-related risks or product-related information with respect to our ~~Products~~ products, could result in an unsafe condition or injury to, or death of, a user of our products. These problems could lead to ~~recalls~~the recall of, or issuance of a safety ~~alerts,~~alert ~~harm~~relating to, our ~~reputation~~products, orand ~~adverse~~could ~~verdicts~~result in unfavorable judicial decisions or ~~costly~~ settlements, arising out of product liability claims and ~~could~~lawsuits, ~~have~~including aclass ~~material~~actions, ~~adverse~~which ~~effect~~could onnegatively affect our financial condition and business operations. In particular, a material adverse event involving one of our products could result in reduced market acceptance and demand for all products offered under our brand and could harm our reputation and ability to market products in the future.

Quality is extremely important to us and our customers due to the serious and costly consequences of Product failure and our business exposes us to potential product liability risks that are inherent in the design, manufacture, and marketing of our products. Component failures, manufacturing defects, design flaws, off-label use, or inadequate disclosure of product-related risks or product-related information with respect to our products, could result in an unsafe condition or injury to, or death of, a user of our products. These problems could lead to the recall of, or issuance of a safety alert relating to, our Products, and could result in unfavorable judicial decisions or settlements arising out of product liability claims and lawsuits, including class actions, which could negatively affect our financial condition and business operations. In particular, a material adverse event involving one of our products could result in reduced market acceptance and demand for all products offered under our brand, and could harm our reputation and ability to market products in the future.32

High quality products are critical to the success of our business. If we fail to meet the high standards we set for ourselves and which our customers expect, and our products are the subject of recalls, safety alerts, or other material adverse events, our reputation could be damaged, we could lose customers, and our revenue and results of operations could decline. Our success also depends generally on our ability to manufacture to exact tolerances precision-engineered components, subassemblies, and finished devices from multiple materials. If our components fail to meet these standards or fail to adapt to evolving standards, our reputation, competitive advantage and market share could be negatively impacted. In certain situations, we may undertake a voluntary recall of products or temporarily shut down product production lines if we determine, based on performance relative to our own internal safety and quality monitoring and testing data, that we have or may be in danger of failing to meet the high-quality standards we have set for ourselves and which our customers expect. Such recalls or cessation of services or product manufacturing may also negatively impact our business.

Any product liability claim brought against us, with or without merit, could be costly to defend and resolve. Any of the foregoing problems, including product liability claims or product recalls in the future, regardless of their ultimate outcome, could harm our reputation and have a material adverse effect on our financial condition and business operations.

We are ~~substantially~~ dependent on patent and other proprietary rights and ~~failing~~our failure to protect such rights or to be successful in litigation related to our rights or the rights of others may result in our payment of significant monetary damages. ~~and/or~~This ~~royalty~~would ~~payments,~~ negatively impact our ability to sell current or future ~~Products,~~products or prohibit us from enforcing our patent and other proprietary rights against others.

We are and will continue to be materially dependent on a combination of patents, trade secrets, and trademarks, non-disclosure and non-competition agreements, and other intellectual property protections which will enable us to maintain our proprietary competitiveness. We also operate in an industry characterized by extensive patent litigation. Patent litigation against us can result in significant damage awards and injunctions that could prevent our manufacture and sale of affected ~~Products~~products or require us to pay significant ~~royalties~~amounts in order to continue to manufacture or sell affected ~~Products~~products. At any given time, we could potentially be involved as a plaintiff and/or as a defendant in a number of patent infringement and/or other contractual or intellectual property related actions, the outcomes of which may not be known for prolonged periods of time. While it is not possible to predict the outcome of such litigation, we acknowledge the possibility that any such litigation could result in our payment of significant monetary damages and/or royalty payments, negatively impact our ability to sell current or future ~~Products,~~products or prohibit us from enforcing our patent and proprietary rights against others, which would have a material adverse effect on the financial condition of our business and on our business operations.

While we intend to defend against any threats to our intellectual property, including our patents, trade secrets, and trademarks, and while we intend to defend against any actual or threatened breaches of our non-disclosure and non-competition agreements, may not adequately protect our intellectual property or enforce such agreements. Further, patent or trademark applications currently pending that are owned by us may not result in patents or trademarks being issued to us, patents or trademarks issued to or licensed by us in the past or in the future may be challenged or circumvented by competitors and such patents or trademarks may be found invalid, unenforceable or insufficiently broad to protect our proprietary advantages.

29In addition, the laws of certain countries in which we market, or intend to market, some or all of our products do not protect our intellectual property rights to the same extent as the laws of the United States, which could make it easier for competitors to capture market position in such countries by utilizing technologies and other intellectual property that are similar to those developed or licensed by us. Competitors may also harm our sales by designing products or offering services that mirror the capabilities of our products, or the technology contained therein, without infringing our intellectual property rights. If we are unable to protect our intellectual property in these countries, it could have a material adverse effect on our financial condition and business operations.

In addition, the laws of certain countries in which we market, or intend to market, some or all of our Products do not protect our intellectual property rights to the same extent as the laws of the U.S., which could make it easier for competitors to capture market position in such countries by utilizing technologies and other intellectual property that are similar to those developed or licensed by us. Competitors may also harm our sales by designing products or offering services that mirror the capabilities of our Products, or the technology contained therein, without infringing our intellectual property rights. If we are unable to protect our intellectual property in these countries, it could have a material adverse effect on our financial condition and business operations.33

In addition to patented technology, we rely on our unpatented technology, trade secrets and know-how. We generally seek to protect this information by confidentiality, non-disclosure and assignment of invention agreements with our officers, employees, contractors and other service providers and with parties with which we do business. These agreements may be breached, which breach may result in the misappropriation of such information, and we may not have adequate remedies for any such breach. We cannot be certain that the steps we have taken will prevent unauthorized use or reverse engineering of our technology.

Moreover, our trade secrets may be disclosed to or otherwise become known or be independently developed by competitors. To the extent that our officers, employees, contractors, other service providers, or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. If, for any of the above reasons, our intellectual property is disclosed or misappropriated, it would harm our ability to protect our rights and have a material adverse effect on our business, financial condition, and results of operations.

If we experience decreasing prices for our Neurology Products and we are unable to reduce our expenses, our financial condition and business operations may suffer.

We may experience decreasing prices for our Neurology Products due to pricing pressure experienced by our customers from managed care organizations and other third-party payers, increased market power of our customers as the medical device industry consolidates, and increased competition among medical engineering and manufacturing service providers. If the prices for our Neurology Products decrease and we are unable to reduce our expenses, our results of operations will be adversely affected.

Our research and development efforts rely upon investments and investment collaborations, and we cannot guarantee that any previous or future investments or investment collaborations will be successful.

Our commercialization strategy requires a wide variety of technologically advanced and capable ~~Products~~products. The rapid pace of technological development in the MedTech industry and the specialized expertise required in different areas of medicine make it difficult for one company alone to develop a broad portfolio of technological solutions. In addition to internally generated growth through our research and development efforts, we anticipate the need to rely upon investments and investment collaborations to provide us access to new technologies both in areas served by our contemplated businesses as well as in new areas. A failure to establish such collaborations may harm our financial condition and business operations.

Going forward, we expect to make future investments where we believe that we can stimulate the development or acquisition of new technologies, Products to further our strategic objectives and strengthen our existing business ventures. Investments and investment collaborations in and with medical technology companies are inherently risky, and we cannot guarantee that any of our previous or future investments or investment collaborations will be successful or will not have a materially adverse effect our financial condition and business operations.

~~The~~Our ability to offer ~~our planned Neurology Products,~~new products and continue the ~~continuing~~ development of ~~new Neurology~~our ~~Products~~existing products, depends upon us maintaining strong relationships with health care professionals.

If we fail to maintain our working relationships with health care professionals, many of our ~~Products~~products may not be developed and offered in line with the needs and expectations of the professionals who use and support our ~~Products~~products, which could cause a decline in our earnings and profitability. The research, development, marketing, and sales of our ~~Products~~products is expected to be dependent upon our maintaining working relationships with such health care professionals, and the use of our ~~Products~~products is expected to often require the participation of health care professionals. In addition, health care professionals are the primary customer groups we expect to market and sell our ~~Products~~products directly to, further highlighting the importance of our relationship with such health care professionals. If we are unable to maintain our relationships with these professionals, we may lose our primary customer base, our ~~Products~~products may not be utilized correctly or to their full potential, and our ability to develop, manufacture, and market future ~~Products~~products may be significantly stunted.

3034

We operate in a highly competitive industries and we may be unable to compete effectively.

We expect to compete domestically and internationally in the neurology, diagnostic imaging and MedTech markets and the motion control market. These markets are characterized by rapid change resulting from technological advances and scientific discoveries. In the product lines and offered services in which we compete, we face a mixture of competitors ranging from large manufacturers with multiple business lines to small manufacturers that offer a limited selection of niche products. Development by other companies of new or improved products, processes, technologies, or the introduction of reprocessed products or generic versions when our proprietary ~~Products~~products lose their patent protection may make our ~~Products~~existing products or proposed ~~Products~~ products less competitive. Competitive factors include product reliability, product performance, product technology, product quality, breadth of product lines, product services, customer support, price, and reimbursement approval from health care insurance providers.

We also face competition for marketing, distribution, and collaborative development agreements, for establishing relationships health care professionals, medical associations, and academic and research institutions, and for licenses to intellectual property. In addition, academic institutions, governmental agencies and other public and private research organizations also may conduct research, seek patient protection and establish collaborative arrangements for discovery, research, clinical development and marketing of products similar to ours. These companies, professionals, and institutions compete with us in recruiting and retaining qualified scientific and management personnel, as well as in acquiring necessary product technologies.

Technological breakthroughs in electric motors could render our Motion Products obsolete.

The electric motor market is subject to rapid technological change and product innovation. ~~Piezo’s~~Our electric motors are based on its proprietary technology, but ~~a number of companies~~several companies are pursuing new technologies, including sensing technologies for electric engines. Any technological breakthroughs could render ~~Piezo’s~~ ~~product~~our Motion Products obsolete, would have a material adverse effect on ~~Piezo’s and~~ our business, financial condition and results of operations ~~and~~ and could result in our shareholders losing their entire investment.

Any failure to attract and retain skilled directors, executives, employees and consultants could impair our product development and commercialization activities.

~~Piezo’s~~Our business depends on the skills, performance, and dedication of ~~its~~our current directors, executive officers and key engineering and technical advisors. ~~Piezo~~We may need to to recruit additional directors, executive management employees, and advisers, particularly engineering, scientific and technical personnel, which will require additional financial resources. In addition, there is currently intense competition for skilled directors, executives and employees with relevant engineering, scientific and technical expertise, and this competition is likely to continue. If ~~Piezo~~we isare unable to attract and retain persons with sufficient engineering, scientific, technical and managerial experience, itwe may be forced to limit or delay ~~its~~our product development activities or may experience difficulties in successfully conducting ~~its~~our business, which would adversely affect ~~its and~~ our operations and financial condition.

~~Piezo’s~~Our growth could suffer if the markets into which we sell our products and services decline.

Our growth depends in part on the growth of the markets which we serve. Any decline or lower than expected growth in our served markets could diminish demand for our ~~Piezo’s~~ products and services, which would adversely affect ~~its~~us and our financial results. Certain of our businesses operate in industries that may experience periodic, cyclical downturns. Demand for ~~Piezo’s~~our products and services will also be sensitive to changes in ~~its~~our current and future customer order patterns, which may be affected by announced price changes, changes in incentive programs, new product introductions ~~and~~ and customer inventory levels. Any of these factors could adversely affect ~~Piezo’s and~~ our growth and results of operations in any given period.

~~Piezo’s~~We ~~competitors~~have ~~may~~limited ~~develop~~internal ~~Products that~~research ~~are~~and ~~more~~development personnel, ~~effective~~making ~~and~~us ~~less~~dependent ~~expensive~~on ~~than~~consulting ~~ours~~relationships.

~~Piezo~~We isconsider ~~engaged~~research inand ~~the~~ development to ~~and~~be ~~marketing~~ an important part of ~~electric~~the ~~engines~~process of designing, ~~which~~developing, isobtaining ~~intensely~~regulatory ~~competitive.~~required ~~There~~approvals ~~are~~and athe ~~number~~commercialization of our ~~current~~products. ~~and~~We ~~Piezo~~expect ~~expects~~to ~~future~~continue ~~products~~to ~~that~~incur ~~Piezo~~substantial ~~will~~costs ~~compete against.~~related ~~Our~~to ~~competitors~~research ~~may:~~and development.

● develop products that are less expensive or more effective than ours; ● commercialize competing products before Piezo can launch its products; ● hold or obtain proprietary rights that could prevent Piezo from commercializing its products; or ● introduce competing products that render Piezo’s product obsolete.35

31We will need to outsource and rely on third parties for various aspects relating to the development, manufacture, sales and marketing of our products as well as in connection with assisting us in the preparation and filing of our FDA submissions, and our future success will be dependent on the timeliness and effectiveness of the efforts of these third parties.

IfWe are ~~Piezo’s~~dependent ~~competitors’~~on ~~market~~consultants ~~electric~~for important aspects of our product development strategy. We do not have the required financial resources ~~motors~~and ~~that~~personnel ~~are~~to ~~less~~carry ~~expensive~~out independently the development of our product candidate, and do not have the capability or ~~more~~resources ~~effective~~to ~~than~~manufacture our ~~Piezo’s~~current product candidates in-house. As a result, we contract with and rely on third parties for important functions, including in connection with the development and finalization of our products, the preparation and filing of our FDA submissions and eventual manufacturing and commercialization of our product candidates. If problems develop in our relationships with third parties, or ~~that~~if ~~gain~~such parties fail to perform as expected, it could lead to delays or ~~maintain~~lack ~~greater~~of ~~market~~progress ~~acceptance~~in obtaining FDA clearance, ~~Piezo~~significant cost increases, changes in ~~may~~our ~~not~~strategies, beand ~~able~~even tofailure ~~compete~~of ~~effectively~~our product initiatives.

~~Piezo~~We expect ~~may~~to ~~not~~rely beon ~~able~~third-party tomanufacturers ~~successfully~~and ~~scale-up manufacturing~~will ofbe ~~its~~dependent ~~products~~on intheir ~~sufficient~~ quality and ~~quantity~~effectiveness.

InOur products ~~order~~requires precise, high-quality manufacturing. The manufacturing process of NeuroCap™ is outsourced to ~~conduct~~a ~~larger~~third-~~scale~~party, ~~commercialization~~while ofthe ~~its~~piezo electric ~~engines~~motors are currently manufactured in-house, ~~Piezo~~by ~~will~~the ~~need~~Company. The failure to ~~manufacture~~achieve ~~its~~and ~~products~~maintain inhigh ~~substantially~~manufacturing standards, ~~larger~~including ~~quantities.~~failure Itto ~~may~~detect ~~not~~or becontrol ~~able~~anticipated toor ~~successfully increase~~unanticipated manufacturing errors or the ~~manufacturing~~frequent ~~capacity~~occurrence ~~for~~of ~~its~~such errors, ~~product~~could result in auser ~~timely~~injury or death, discontinuance or delay of ongoing or planned clinical studies, delays or failures in product testing or delivery, cost~~-effective~~ ~~manner~~overruns, product recalls or atwithdrawals ~~all~~and other problems that could seriously hurt our business. InContract medical ~~addition~~device manufacturers often encounter difficulties involving production yields, quality ~~issues~~control ~~may~~and ~~arise~~quality assurance and shortages ~~during~~of ~~scale-up~~qualified ~~activities~~personnel. IfThese ~~Piezo~~manufacturers isare ~~unable~~subject to ~~successfully~~stringent ~~scale~~regulatory uprequirements, including the ~~manufacture~~FDA’s ofcurrent ~~its~~good-manufacturing-practices regulations. ~~product~~If inour ~~sufficient~~contract ~~quality~~manufacturers ~~and~~fail ~~quantity~~to maintain ongoing compliance at any time, the ~~further~~production ~~development~~ of ~~its~~our products ~~and~~could ~~expected~~be ~~sales~~interrupted, resulting ~~will~~in bedelays ~~delayed,~~or ~~which~~discontinuance ~~could~~of ~~significantly~~our ~~harm~~clinical ~~its~~studies, additional costs and ~~our~~loss ~~business~~of potential revenues.

~~A reduction or interruption in our supply~~We ofmay ~~raw~~be ~~materials~~subject ~~coupled with an inability~~ to ~~develop~~potential ~~alternative~~product ~~sources~~liability ~~for such raw materials,~~ and other ~~similar~~claims ~~supply~~that ~~chain~~could ~~management difficulties,~~materially ~~may~~impact ~~adversely affect~~ our ~~ability~~business toand ~~manufacture our~~financial ~~Products~~condition.

The development ~~manufacture~~and sale of our ~~Products requires~~products ~~the~~exposes ~~timely~~us ~~delivery~~to the risk of ~~sufficient~~significant ~~amounts~~damages offrom ~~quality~~product ~~components~~liability and ~~materials~~other claims, and isthe ~~highly~~use of ~~exacting~~our ~~and~~product ~~complex,~~candidates ~~due~~may result in ~~part to~~adverse ~~strict~~effects. ~~regulatory~~We ~~requirements,~~cannot ~~and~~predict weall ~~cannot~~the ~~guarantee~~possible harms or adverse effects that ~~our~~may ~~efforts~~result. We tomaintain ~~secure~~a ~~quality~~modest ~~components~~amount ~~and~~of ~~materials~~product inliability ainsurance ~~timely~~to provide some protection from claims. Nonetheless, ~~cost~~we may not have sufficient ~~effective~~resources ~~manner~~to ~~will~~pay befor ~~successful.~~any ~~Other~~liabilities ~~problems~~resulting infrom ~~the~~a ~~manufacturing~~personal ~~process,~~injury ~~including~~or ~~equipment~~other ~~malfunction~~claim, ~~failure~~even toif ~~follow~~it ~~specific protocols~~is ~~and~~partially ~~procedures,~~covered ~~defective~~by ~~raw~~insurance. ~~materials~~In addition ~~and~~to ~~environmental~~the ~~factors~~possibility of direct claims, ~~could~~we ~~lead~~may be required to ~~launch~~indemnify ~~delays,~~third ~~product~~parties ~~shortage,~~against ~~unanticipated~~damages and other liabilities arising ~~costs,~~out ~~lost~~of ~~revenues~~our development, commercialization and ~~damage~~other tobusiness ~~our~~activities, ~~reputation.~~which Awould ~~failure~~increase toour ~~identify~~liability ~~and~~exposure. ~~address~~If ~~manufacturing~~third ~~problems~~parties that ~~prior~~have agreed to ~~the~~indemnify ~~release~~us offail ~~Products~~ to ~~our~~do ~~customers~~so, we may ~~also~~be ~~result~~held inresponsible ~~quality~~for orthose ~~safety~~damages ~~issues~~and other liabilities as well.

Our ~~operating results could be negatively~~ ~~impacted~~competitors ifmay itdevelop isproducts ~~unable~~that toare ~~capitalize~~more oneffective ~~research~~ and ~~development~~less ~~spending~~expensive than ours.

We ~~have and intend to continue~~ toare ~~spend~~engaged ~~a significant amount of time and resources on research and development projects~~ in ~~order to develop and validate new and innovative products. We believe these projects will result in~~ the ~~commercialization~~development of ~~new~~Neurology ~~products~~Products and ~~will~~Motion ~~create additional future sales. However~~Products, ~~factors~~ ~~including regulatory delays, safety concerns or patent disputes could delay~~ the ~~introduction or~~ marketing ~~of new products. Additionally, unanticipated issues may arise in connection with current~~ and ~~future~~sale ~~clinical~~of ~~studies~~which ~~that~~is ~~could~~intensely ~~delay or terminate a product’s development prior to regulatory approval~~competitive. ~~We may experience an unfavorable impact on our financial condition and business operations if~~Our wecompetitors ~~are unable to capitalize on those efforts by attaining the proper FDA approval or to successfully market new products.~~may:

~~Piezo~~● ~~relies~~develop onproducts ~~suppliers~~that toare ~~provide~~less ~~equipment, components~~expensive ~~and~~or ~~services,~~more ~~which~~effective ~~creates~~than ~~certain~~ours; ~~risks~~● ~~and~~commercialize ~~uncertainties~~competing products before we can launch our products; ● hold or obtain proprietary rights that ~~may~~could ~~adversely~~prevent ~~affect~~us ~~its~~from ~~business~~commercializing our products; or ● introduce competing products that render our product obsolete.

~~Piezo’s business requires that it buys equipment,~~If ~~components~~our ~~and~~competitors ~~services~~market ~~from~~Neurology ~~third~~Products ~~parties.~~or ~~Its~~Motion ~~reliance~~Products onthat ~~suppliers~~are ~~involves~~less ~~certain~~expensive ~~risks, including poor quality~~ or anmore ~~insecure~~effective ~~supply chain,~~than ~~which~~our ~~could adversely affect the reliability and reputation of Piezo’s~~ products~~; changes in the cost of these purchases due to inflation~~, ~~exchange~~or ~~rates,~~that ~~tariffs,~~ gain or ~~other~~maintain ~~factors;~~greater ~~shortages~~market ~~of components~~acceptance, ~~commodities~~we ormay ~~other~~not ~~materials,~~be ~~which~~able ~~could adversely affect its manufacturing efficiencies and its ability~~ to ~~make~~compete ~~timely delivery~~effectively. ~~Any of these uncertainties could adversely affect Piezo’s profitability and ability to compete.~~

~~Certain materials and components used in Piezo’s products are required and qualified to be sourced from a single or a limited number of suppliers.~~36

~~Because of any number of domestic or global factors,~~We ~~certain~~may ~~materials~~not ~~and~~be ~~components~~able ~~used by Piezo in its Products could become in short supply resulting in limited availability and/or increased costs. Although Piezo believes that alternative suppliers are available~~ to ~~supply~~successfully ~~materials~~scale-up ~~and~~manufacturing ~~components to replace those currently used, doing so may require that Piezo redesign work and would require having those new sources qualified within its systems prior to making use~~ of ~~those~~our ~~new~~products ~~alternatives. Any interruption~~ in ~~the~~sufficient ~~supply~~quality ~~from any supplier that serves as a sole source could delay product shipments~~ and ~~have a material adverse effect on its business, financial condition and results of operations~~quantity. ~~Piezo’s profits may decline if the price of raw materials rise and it cannot recover the increases from its then customers.~~

~~Piezo~~In order ~~use~~to ~~various~~conduct ~~raw~~larger-scale ~~materials~~commercialization of our products, ~~such~~we aswill need to manufacture our products in substantially larger quantities. ~~piezoceramic~~We may not be able to successfully increase the manufacturing capacity for our products in a timely or cost-effective manner, ~~steel~~or ~~and~~at ~~plastics~~all. In addition, quality issues may arise during scale-up activities. If we are unable to successfully scale up the manufacture of our products in sufficient quality and quantity, the further development of our ~~manufacturing~~products ~~operations~~and expected sales will be delayed, which could significantly harm our business.

~~The raw materials used by Piezo to manufacture~~A ~~its~~reduction ~~Products~~or ~~may~~interruption ~~become~~in ~~subject~~our tosupply ~~volatility.~~of Asraw amaterials ~~result,~~coupled itwith ~~may~~an beinability ~~necessary for Piezo~~ to ~~increase~~develop ~~its~~alternative ~~product~~sources ~~sales price~~ for ~~its electric~~such ~~engine~~raw ~~which could have a negative impact on its unit volume~~materials, ~~revenue and potential operating income. Piezo is also subject to~~ ~~risks associated with U.S.~~ and ~~foreign legislation and regulations relating to imports, including quotas, duties, tariffs or taxes, and~~ other ~~charges~~similar orsupply ~~restrictions~~chain onmanagement ~~imports~~difficulties, ~~which~~may ~~could~~ adversely affect ~~its~~our ~~operations and its~~ ability to import raw materials and components at current or increased levels. Piezo cannot predict whether additional U.S. and foreign customs quotas, duties, tariffs, taxes or other charges or restrictions, requirements as to where raw materials must be purchased, or other restrictions on its imports will be imposed upon the importation of manufacture our products ~~in the future or adversely modified, or what effect such actions would have on our costs of operations~~.

WeThe manufacture ~~may~~of our Products requires the timely delivery of sufficient amounts of quality components and materials and is highly exacting and complex, due in part to strict regulatory requirements, and we cannot guarantee that our efforts to secure quality components and materials in a timely, cost-effective manner will be ~~unable~~successful. Other problems in the manufacturing process, including equipment malfunction, failure to ~~attract~~follow specific protocols and ~~retain~~procedures, ~~key~~defective raw materials and environmental factors, could lead to launch delays, ~~employees~~product shortage, unanticipated costs, lost revenues and damage to our reputation. A failure to identify and address manufacturing problems prior to the release of Products to our customers may also result in quality or safety issues.

Our ~~sales, technical and other~~ ~~key~~operating ~~personnel~~results ~~play~~could anbe ~~integral~~negatively ~~role~~impacted inif ~~the development, marketing and selling of our Products. If~~ we are unable to ~~recruit,~~capitalize ~~hire,~~on ~~develop~~ research and ~~retain~~development ~~a talented, competitive work force, we may not be able to meet our strategic business objectives~~spending.

32We have and intend to continue to spend a significant amount of time and resources on research and development projects to develop and validate new and innovative products. We believe these projects will result in the commercialization of new products and will create additional future sales. However, factors including regulatory delays, safety concerns or patent disputes could delay the introduction or marketing of new products. Additionally, unanticipated issues may arise in connection with current and future clinical studies that could delay or terminate a product’s development prior to regulatory approval. We may experience an unfavorable impact on our financial condition and business operations if we are unable to capitalize on those efforts by attaining the proper FDA approval or to successfully market new products.

~~The~~We rely ~~Russian~~on third-~~Ukrainian~~party ~~Conflict~~suppliers ~~may~~to ~~adversely~~provide ~~affect~~equipment, ~~our~~components ~~business~~and services, ~~financial~~ ~~condition~~which creates certain risks and ~~results~~uncertainties that may adversely affect our business.

InOur business ~~February~~requires ~~2022,~~that ~~the~~we ~~Russian Federation~~buy equipment, components and ~~Belarus~~services ~~commenced~~from athird ~~military~~parties. ~~action~~Our ~~with~~reliance ~~the~~on ~~country~~third-party ofsuppliers ~~Ukraine.~~involves ~~The~~certain risks, ~~specific~~including ~~impact~~poor onquality ~~our~~or ~~financial~~an ~~condition~~unreliable supply chain, ~~results of~~which ~~operations~~could ~~and~~(i) ~~cash~~adversely ~~flows~~affect isthe ~~not~~reliability ~~determinable~~and asreputation of ~~the~~our ~~date~~products; (ii) ~~hereof.~~result ~~However,~~in tochanges in the ~~extent~~cost ~~that~~of ~~such~~these ~~military~~purchases ~~action~~due ~~spreads~~ to ~~other countries~~inflation, ~~intensifies~~exchange rates, tariffs, or ~~otherwise~~other ~~remains~~factors; ~~active~~and (iii) result in shortages of components, ~~such~~commodities ~~action~~or other materials, which could ~~have~~adversely aaffect ~~material~~our ~~adverse~~manufacturing ~~effect~~efficiencies onand our ~~financial~~ability to ~~condition,~~make ~~results~~ timely delivery. Any of ~~operations,~~these uncertainties could adversely affect our profitability and ~~cash~~ability ~~flows~~to compete.

Certain materials and components used in our products are required and qualified to be sourced from a single or a limited number of suppliers.

Because of any number of domestic or global factors, certain materials used by us in our products, specifically ceramics associated with our piezo motion products for which we rely on only two suppliers could become in short supply resulting in limited availability and/or increased costs. Although we believe that alternative suppliers are available to supply materials and components to replace those currently used, doing so may require that we redesign work and would require having those new sources qualified within our systems prior to making use of those new alternatives. Any interruption in the supply from any supplier that serves as a sole source could delay product shipments and have a material adverse effect on our business, financial condition and results of operations. Our profits may decline if the price of raw materials rise and we cannot recover the increases from our then customers.

We use various raw materials, such as piezoceramic, steel and plastics, in our manufacturing operations.

The raw materials used by us to manufacture our products may become subject to volatility. As a result, it may be necessary for us to increase our product sales price which could have a negative impact on our unit volume, revenue and potential operating income. We are also subject to risks associated with United States and foreign legislation and regulations relating to imports, including quotas, duties, tariffs or taxes, and other charges or restrictions on imports, which could adversely affect our operations and our ability to import raw materials and components at current or increased levels. We cannot predict whether additional United States and foreign customs quotas, duties, tariffs, taxes or other charges or restrictions, requirements as to where raw materials must be purchased, or other restrictions on our imports will be imposed upon the importation of our products in the future or adversely modified, or what effect such actions would have on our costs of operations.

The Russian-Ukrainian Conflict adversely affected the operations of our Russian subsidiary, which we are winding down.

In February 2022, the Russian Federation commenced a military action with the country of Ukraine, which has had a material adverse effect on the operations of our Russian subsidiary, which had accounted for the majority of our revenues. With the uncertainty raised due to the continued Russian invasion of Ukraine, and with such operations no longer part of the Company’s business plan, the Company began winding down the operations of MMDR. Accordingly, during the second quarter of Fiscal 2022, MMDR satisfied its last distribution obligations and laid off all of its employees. Since then, no work has been conducted by MMDR, and the Company has no ongoing operations or employees in Russia. MMDR has no assets or liabilities and is currently a legal entity, waiting to be dissolved by Russian authorities, which we expect will occur during 2023. The Company does not currently sell, import, or export any of its products in, to or from Russia, nor does it plan to engage in such activities in the future.

Security vulnerabilities in our systems could lead to reduced revenues and claims against us.

Our operations may depend upon our ability to withstand cyber-attacks. Third parties may develop and deploy viruses, worms, and other malicious software programs, some of which may be designed to attack our systems or networks. Our operations also involve the storage and transmission of proprietary information which may be the target of cyber-attacks. Hardware and software that we produce or procure from third parties also may contain defects in manufacture or design, including bugs and other problems, which could compromise their ability to withstand cyber-attacks.

The costs to us to eliminate or alleviate security vulnerabilities can be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution, or other critical functions, as well as potential liability to the company. The risk that these types of events could seriously harm our business is likely to increase as we expand our operations.

If we or our third-party service providers experience a security breach or unauthorized parties otherwise obtain access to our network, our data or our cloud services may be perceived as not being secure, our reputation may be harmed, demand for our products may be reduced, and we may incur significant liabilities.

Our operations involve the storage and transmission of data, and security breaches could result in the loss of this information, litigation, indemnity obligations and other liability. We may become the target of cyber-attacks by third parties seeking unauthorized access to our data or users’ data or to disrupt our ability to provide service. While we have taken steps to protect the confidential information that we have access to, including confidential information we may obtain through our customer support services or customer usage of our cloud services, our security measures or those of our third-party service providers could be breached or we could suffer data loss. Computer malware, viruses, social engineering (predominantly spear phishing attacks), and general hacking have become more prevalent in our industry, particularly against cloud services. If our security measures are or are believed to have been breached as a result of third-party action, employee error, malfeasance or otherwise, our reputation could be damaged, our business may suffer, and we could incur significant liability.

We also process, store, and transmit our own data as part of our business and operations. This data may include personally identifiable, confidential, or proprietary information. There can be no assurance that any security measures that we or our third-party service providers have implemented will be effective against current or future security threats. While we have developed systems and processes to protect the integrity, confidentiality and security of our data, our security measures or those of our third-party service providers could fail and result in unauthorized access to or disclosure, modification, misuse, loss or destruction of such data.

Because there are many different security breach techniques and such techniques continue to evolve, we may be unable to anticipate attempted security breaches and implement adequate preventative measures. Any security breach or other security incident, or the perception that one has occurred, could result in damage to our brand, disrupt normal business operations, require us to spend material resources to investigate or correct the breach, expose us to legal liabilities, including litigation, regulatory enforcement, and indemnity obligations, and adversely affect our revenues and operating results. These risks may increase as we continue to grow the number and scale of our cloud services, and process, store, and transmit increasingly large amounts of data.

Regulatory and Legal Risks

~~Medical~~Motian product and medical device development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any ~~Product~~product.

Before obtaining marketing approval from regulatory authorities for the sale of our Neurology Products under development in the United States or elsewhere, we must complete all pre-clinical testing, clinical trials and other regulatory requirements necessitated by the FDA and foreign regulatory bodies and demonstrate the performance and safety of our ~~Products~~products. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. Further, the outcomes of completed clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Clinical data is often susceptible to varying interpretations and analyses, and many companies that have believed their products performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval. We have limited resources to complete the expensive process of medical device development, pre-clinical testing and clinical trials, putting us at a disadvantage, particularly compared to some of our larger and established competitors, and we may not have sufficient resources to commercialize our ~~Products~~products under development in a timely fashion, if ever.

We may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our ~~Products~~products, including:

●

regulators may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

●

the failure to successfully complete pre-clinical testing requirements required by the FDA and international organizations;

●

we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts with third parties or clinical trial protocols with prospective trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different trial sites;

●

● clinical trials of our ~~Products~~products may produce negative or inconclusive results, including failure to demonstrate statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon our development programs;

●

the number of people with brain related disorders required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or people may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate;

~~● our Products may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials;~~39

●

our products may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the trials;

●

our third-party contractors conducting the clinical trials may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

●

regulators may require that we or our investigators suspend or terminate clinical development for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

● the cost of clinical trials of our ~~Products~~products may be greater than we anticipate;

● the supply or quality of our ~~Products~~products or other materials necessary to conduct clinical trials of our ~~Products~~products may be insufficient or inadequate; and

●

delays from our suppliers and manufacturers could impact clinical trial completion and impact revenue.

If we are required to conduct additional clinical trials or other testing of our ~~Products~~products under development beyond those that we contemplate, if we are unable to successfully complete clinical trials of our ~~Products~~products under development or other testing, if the results of these trials or tests are not favorable or if there are safety concerns, we may:

●

not obtain marketing approval at all;

● be delayed in obtaining marketing approval for our ~~Products~~products under development in a jurisdiction;

●

be subject to additional post-marketing testing requirements; or

● have our ~~Products~~products removed from the market after obtaining marketing approval.

Our development costs will also increase if we experience delays in testing or marketing approvals. We do not know whether any of our clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays also could allow our competitors to bring innovative products to market before we do and impair our ability to successfully commercialize our ~~Products~~products.

We are subject to costly and complex laws and governmental regulations and any adverse regulatory action may materially adversely affect our financial condition and business operations.

Our medical devices are subject to regulation by numerous government agencies, including the FDA and comparable agencies outside of the UUnited States.S. To varying degrees, each of these agencies requires us to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing, and distribution of our ~~Products~~products. We cannot guarantee that we will be able to obtain or maintain marketing clearance for our new ~~Products~~products, or enhancements or modifications to existing ~~Products~~products, and the failure to maintain approvals or obtain approval or clearance could have a material adverse effect on the financial condition of our business and our business operations. Even if we are able to obtain such approval or clearance, it may take a significant amount of time, require the expenditure of substantial resources, involve stringent clinical and pre-clinical testing, require increased post-market surveillance, involve modifications, repairs, or replacements of our ~~Products~~products, and result in limitation on the proposed uses of our ~~Products~~products.

3440

Both before and after a ~~Product or~~product ~~service~~ is commercially released or offered, we have ongoing responsibilities under FDA regulations. Many of our facilities and procedures and those of our suppliers are also subject to periodic inspections by the FDA to determine compliance with the FDA’s requirements, including the quality system regulations and medical device reporting regulations. The results of these inspections can include inspectional observations on FDA’s Form-483, warning letters, or other forms of enforcement. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could ban such medical devices, detain or seize adulterated or misbranded medical devices, order a recall, repair, replacement, or refund of such devices, refuse to grant pending pre-market approval applications or require certificates of non-U.S. governments for exports, and/or require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health. The FDA may also assess civil or criminal penalties against us, our officers or employees and impose operating restrictions on a company-wide basis or enjoin and/or restrain certain conduct resulting in violations of applicable law. The FDA may also recommend prosecution to the U. S. Department of Justice. Governmental agencies comparable to the FDA which operate in foreign jurisdictions may also require us to comply with regulations similar to those required by the FDA and failing to do so may result in material adverse ramifications similar to those caused by a failure to comply with FDA regulations. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively marketing and selling our Products and limit our ability to obtain future pre-market clearances or approvals, and could cause result in a substantial modification to our business practices and operations.

In addition, the FDA has taken the position that device manufacturers are prohibited from promoting their products other than for the uses and indications set forth in the approved product labeling. A number of enforcement actions have been taken against manufacturers that promote products for “off-label” uses, including actions alleging that federal health care program reimbursement of products promoted for “off-label” uses constitute false and fraudulent claims to the government. The failure to comply with “off-label” promotion restrictions can result in significant civil or criminal exposure, administrative obligations and costs, and/or other potential penalties from, and/or agreements with, the federal government.

Governmental regulations outside the ~~U.S.~~United States have become increasingly stringent and more common, and we may become subject to more rigorous regulation by governmental authorities in the future in the event we determine to conduct business internationally. In the European Union, for example, a new Medical Device Regulation was published in 2017 which, when it enters into full force, will impose significant additional premarket and post-market requirements. Penalties for a company’s non-compliance with governmental regulation could be severe, including fines and revocation or suspension of a company’s business license, mandatory price reductions and criminal sanctions. Any governmental law or regulation imposed in the future may have a material adverse effect on us.

Legislative, regulatory, or medical cost reimbursement changes may adversely impact our business.

New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, that relate to the health care system in the U.S. and in other jurisdictions may change the nature of and regulatory requirements relating to innovations in medical devices, testing and regulatory approvals, limit or eliminate payments for medical procedures and treatments, or subject the pricing of medical devices to government control. In addition, third-party payors in the U.S. are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement of new products. Consequently, significant uncertainty exists as to the reimbursement status of newly approved health care products. Significant changes in the health care system in the U.S. or elsewhere, including changes resulting from adverse trends in third-party reimbursement programs, could have a material adverse effect on our projected future operating results and our ability to raise capital, commercialize products, and remain in business.

Healthcare reform laws could adversely affect our product candidate and financial condition.

In the United States, there have been, and continue to be, a number of legislative initiatives to contain healthcare costs. In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (ACA), was enacted in the United States, which made a number of substantial changes in the way healthcare is financed by both governmental and private insurers. Among other ways in which it may affect our business, the ACA implemented payment system reforms, including a national pilot program on payment bundling to encourage hospitals, physicians, and other providers to improve the coordination, quality, and efficiency of certain healthcare services through bundled payment models and expanded the eligibility criteria for Medicaid programs.

Since its enactment, there have been judicial, executive, and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal, or replace the ACA will impact the ACA or our business.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension implemented under various COVID-19 relief legislation from May 1, 2020 through the end of 2021, unless additional Congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Further, the Bipartisan Budget Act of 2018 among other things, amended the Medicare statute, effective January 1, 2019, to reduce the coverage gap in most Medicare drug plans, commonly known as the “donut hole,” by raising the manufacturer discount under the Medicare Part D coverage gap discount program to 70%. It is unclear how the ACA and its implementation, as well as efforts to repeal or replace, or invalidate, the ACA, or portions thereof, will affect our insulin pump or our business. Additional legislative changes, regulatory changes, and judicial challenges related to the ACA remain possible. It is possible that the ACA, as currently enacted or as it may be amended in the future, and other healthcare reform measures that may be adopted in the future, could have an adverse effect on our industry generally and on our ability to commercialize our insulin pump and achieve profitability.

Following FDA clearance or approval, our products will still be subject to recalls, which would harm our reputation, business operations and financial results.

Following FDA clearance or approval of our products, the FDA has the authority to require the recall of a product if we commence manufacturing of such product and we or any contract manufacturers we retain fail to comply with relevant regulations pertaining to manufacturing practices, labeling, advertising or promotional activities, or if new information is obtained concerning the safety or efficacy of the device. A government-mandated recall could occur if the FDA finds that there is a reasonable probability that a device would cause serious, adverse health consequences or death. A voluntary recall by us could occur as a result of manufacturing defects, labeling deficiencies, packaging defects or other failures to comply with applicable regulations. Any recall would divert management’s attention and financial resources and harm our reputation with customers. A recall involving one or more of our products would be harmful to our business, financial condition and results of operations.

We are subject to environmental laws and regulations and the risk of environmental liabilities, violations and litigation.

We are subject to numerous ~~U.S.~~ United States federal, state, local and non-U.S. environmental, health and safety laws and regulations concerning, among other things, the health and safety of our employees, the generation, storage, use and transportation of hazardous materials, emissions or discharges of substances into the environment, investigation and remediation of hazardous substances or materials at various sites, chemical constituents in medical products and end-of-life disposal and take-back programs for medical devices. Our operations involve the use of substances regulated under such laws and regulations, primarily those used in manufacturing and sterilization processes. If we violate these environmental laws and regulations, we could be fined, criminally charged or otherwise sanctioned by regulators.

In addition, certain environmental laws assess liability on current or previous owners or operators of real property for the costs of investigation, removal or remediation of hazardous substances or materials at their properties or at properties which they have disposed of hazardous substances. Liability for investigative, removal and remedial costs under certain U.S. federal and state laws are retroactive, strict and joint and several. In addition to cleanup actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of, or exposure to, hazardous substances. The ultimate cost of site cleanup and timing of future cash outflows is difficult to predict, given the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods42

35In addition, certain environmental laws assess liability on current or previous owners or operators of real property for the costs of investigation, removal or remediation of hazardous substances or materials at their properties or at properties which they have disposed of hazardous substances. Liability for investigative, removal and remedial costs under certain U.S. federal and state laws are retroactive, strict and joint and several. In addition to cleanup actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of, or exposure to, hazardous substances. The ultimate cost of site cleanup and timing of future cash outflows is difficult to predict, given the uncertainties regarding the extent of the required cleanup, the interpretation of applicable laws and regulations, and alternative cleanup methods.

We may in the future be subject to additional environmental claims for personal injury or cleanup based on our past, present or future business activities (including the past activities of companies we may acquire). The costs of complying with current or future environmental protection and health and safety laws and regulations, or liabilities arising from past or future releases of, or exposures to, hazardous substances, may exceed our estimates, or have a material adverse effect on the financial condition of our business and our business operations.

Our failure to comply with laws and regulations relating to reimbursement of health care goods and services may subject us to penalties and adversely impact our reputation, financial condition, and business operations.

Our neurology ~~Products~~products are expected to be purchased primarily by medical professionals and organizations that typically bill various third-party payers, such as governmental programs (e.g., Medicare, Medicaid and comparable non-U.S. programs), private insurance plans and managed care plans, for the healthcare services provided to their patients. The ability of our customers to obtain appropriate reimbursement for products from third-party payers is critical because it affects which products customers purchase and the prices they are willing to pay for such products. As a result, our ~~Products~~products are subject to regulation regarding quality and cost by the U.S. Department of Health and Human Services, including the Centers for Medicare & Medicaid Services or CMS as well as comparable state and non-U.S. agencies responsible for reimbursement and regulation of health care goods and services. The principal U.S. federal laws implicated include those that prohibit (i) the filing of false or improper claims for federal payment, known as the false claims laws, (ii) unlawful inducements for the referral of business reimbursable under federally-funded health care programs, known as the anti-kickback laws, and (iii) health care service providers from seeking reimbursement for providing certain services to a patient who was referred by a physician who has certain types of direct or indirect financial relationships with the service provider, known as the Stark Law. Many states have similar laws that apply to reimbursement by state Medicaid and other funded programs as well as in some cases to all payers. Insurance companies can also bring a private cause of action claiming treble damages against a manufacturer for causing a false claim to be filed under the federal Racketeer Influenced and Corrupt Organizations Act. In addition, if we were to become a manufacturer of FDA-approved devices reimbursable by federal healthcare programs, we would be subject to the Physician Payments Sunshine Act, which would require us to annually report certain payments and other transfers of value we make to U.S.-licensed physicians or U.S. teaching hospitals.

Our anticipated domestic and international operations may be subject to risks relating to changes in government and private medical reimbursement programs and policies, and changes in legal regulatory requirements in the U.S. and around the world. Implementation of further legislative or administrative reforms to the reimbursement system in the U.S. and outside of the U.S., or adverse decisions relating to our Products or services by administrators of these systems in coverage or reimbursement, could significantly reduce reimbursement or result in the denial of coverage, which could have an impact on the acceptance of and demand for our Products and the prices that our customers are willing to pay for them.

The laws and regulations of healthcare related products that are applicable to us, including those described herein, are subject to evolving interpretations and enforcement discretion. If a governmental authority were to conclude that we are not in compliance with applicable laws and regulations, we and our officers and employees could be subject to severe criminal and civil penalties, including, for example, exclusion from participation as a supplier of products or services to beneficiaries covered by CMS. Any failure to comply with laws and regulations relating to reimbursement and healthcare products could adversely affect our financial condition and business operations.

We are subject to federal, state and foreign healthcare regulations related to anti-bribery and anti-corruption laws, and could face substantial penalties if we fail to fully comply with such regulations and laws.43

~~The relationships that we and our potential distributors~~We ~~and others that market or may market our Products have with healthcare professionals, such as physicians and hospitals,~~ are subject to ~~scrutiny~~ ~~under various~~ federal, state, ~~foreign laws often referred to collectively as healthcare fraud~~ and ~~abuse laws. In addition, U.S. and~~ foreign ~~government~~healthcare ~~regulators~~regulations ~~have~~related ~~increased~~to ~~the enforcement of the Foreign Corrupt Practices Act and other~~ anti-bribery ~~laws. We also must comply with a variety of other laws that protect the privacy of individually identifiable healthcare information~~ and ~~impose extensive~~anti-corruption ~~tracking and reporting related to all transfers of value provided to certain healthcare professionals. These~~ laws and ~~regulations are broad in scope and are subject to evolving interpretation and we~~ could beface ~~required to incur~~ substantial ~~costs to monitor compliance~~ orpenalties ~~to alter our practices~~ if we ~~are~~fail ~~found not~~ to befully incomply ~~compliance.~~with ~~Violations~~such ofregulations ~~these laws may be punishable by criminal or civil sanctions, including substantial fines, imprisonment of current or former employees~~ and ~~exclusion from participation in governmental healthcare programs, all of which could have a material adverse effect on our financial condition and business operations~~laws.

36The relationships that we and our potential distributors and others that market or may market our products have with healthcare professionals, such as physicians and hospitals, are subject to scrutiny under various federal, state, foreign laws often referred to collectively as healthcare fraud and abuse laws. In addition, U.S. and foreign government regulators have increased the enforcement of the Foreign Corrupt Practices Act and other anti-bribery laws. We also must comply with a variety of other laws that protect the privacy of individually identifiable healthcare information and impose extensive tracking and reporting related to all transfers of value provided to certain healthcare professionals. These laws and regulations are broad in scope and are subject to evolving interpretation and we could be required to incur substantial costs to monitor compliance or to alter our practices if we are found not to be in compliance. Violations of these laws may be punishable by criminal or civil sanctions, including substantial fines, imprisonment of current or former employees and exclusion from participation in governmental healthcare programs, all of which could have a material adverse effect on our financial condition and business operations.

~~The Company’s international operations~~Risks ~~expose~~Related it to ~~legal,~~our ~~political and regulatory risks, which could have a material effect on its business.~~Securities

~~The Company has operations~~There in Russia and Ukraine. Memory MD Russia operates a medical distribution company in Russia. Piezo’s research and development operations are located in Kyiv, Ukraine. The Russian invasion of Ukraine on February 24, 2022 exposes our operations in both counties to risks. Moreover, the Company is ~~required~~not ~~to comply with various import laws and export control and economic sanctions laws~~now, ~~which may affect its transactions with certain customers, business partners~~ and ~~other~~there ~~persons and dealings between our employees and subsidiaries. In certain circumstances, export control and economic sanctions regulations or embargos~~ may ~~prohibit~~never ~~the export of certain products~~be, ~~services and technologies. In other circumstances, we may be required to obtain~~ an ~~export~~active ~~license~~market before exporting the controlled item. Compliance with the various import laws that apply to its businesses can restrict its access to, and increase the cost of obtaining, certain products and at times can interrupt its supply of imported inventory. In addition to government regulations regarding sale and export, we are subject to other regulations regarding its Products. For example, the SEC has adopted disclosure rules for ~~companies~~our ~~that~~Common use conflict minerals in their products, with substantial supply chain verification requirements in the event that the materials come from, or could have come from, the Democratic Republic of the Congo or adjoining countriesStock. ~~These~~We ~~rules~~cannot ~~and~~assure ~~verification~~you ~~requirements impose additional costs on Piezo and on its suppliers, and may limit the sources or increase the cost of materials used in its products. Further, if it is unable to certify~~ that ~~its products are conflict free, Piezo may face challenges with its customers that could place it at a competitive disadvantage, and~~ our ~~reputation~~Common ~~may~~Stock bewill ~~harmed~~become liquid.

WeThere currently ~~subject~~is tono aliquid ~~variety~~market ~~of legal~~for ~~and~~our ~~regulatory~~Common ~~proceedings~~Stock. inAn ~~the~~investor ~~course~~may offind ~~its~~it ~~business~~difficult ~~that~~to ~~could~~obtain ~~adversely~~accurate ~~affect~~quotations ~~our~~as ~~financial~~to ~~results. For example,~~ the ~~raw~~market ~~piezoceramic~~value ~~material~~of ~~used throughout~~ our ~~products~~Common isStock ~~presently~~and ~~included~~trading asof anour ~~exemption~~Common toStock ~~the~~may ~~European~~be ~~Union’s~~extremely ~~Directive~~sporadic. ~~2011/65/EU dealing~~An ~~with~~active ~~hazardous~~market ~~substance~~for ~~use~~our inCommon ~~industrial,~~Stock ~~commercial,~~may ~~and~~never develop. ~~consumer~~In ~~applications.~~addition, ~~One~~if ~~exemption~~we ~~(exemption~~failed ~~7-C)~~to ~~concerning~~meet the ~~use~~ ofcriteria ~~lead~~set ~~(Pb)~~forth in ~~piezoelectric~~SEC ~~ceramics~~regulations, ~~presently~~various ~~exists~~requirements ~~allowing~~would ~~lead (Pb) to~~ be ~~used~~imposed inby ~~the~~law ~~manufacture of PZT (lead-zirconate-titanate)~~on ~~type~~broker-dealers ~~piezoelectric~~who ~~ceramic~~sell ~~products,~~our ~~which~~securities isto ~~the~~persons ~~type~~other ofthan ~~material~~established ~~Piezo~~customers ~~uses~~and inaccredited ~~its products~~investors. ~~European~~Consequently, ~~Union~~such ~~laws~~regulations may ~~with~~deter ~~respect~~broker-dealers tofrom ~~the exemption~~recommending ~~could~~or ~~change~~selling inour ~~the~~Common ~~future~~Stock, ~~making~~which itmay ~~difficult~~further toaffect ~~sell~~ its ~~products~~liquidity. ~~containing~~This ~~such~~would ~~materials~~also ~~within~~make it ~~the~~more ~~European~~difficult ~~Union,~~for ~~which would~~us ~~impact~~to ~~our~~raise ~~revenues~~additional capital.

~~Risks~~The price ~~Related~~of to our Common Stock might fluctuate significantly, and you could lose all or part of your investment.

~~There~~Volatility in isthe ~~not~~market ~~now,~~price ~~and~~of ~~there~~our Common Stock may ~~never~~prevent ~~be, an~~you ~~active~~from ~~market~~being ~~for~~able to sell your shares of our ~~common~~Common ~~stock~~Stock ~~and~~at weor ~~cannot~~above ~~assure~~the price you ~~that~~paid ~~our~~for ~~common~~your ~~stock~~shares. ~~will~~The ~~become~~trading ~~liquid~~price orof ~~that~~our itCommon ~~will~~Stock may be ~~listed~~volatile onand asubject to wide price fluctuations in response to ~~securities~~various ~~exchange.~~factors, including:

There currently is no liquid market for our common stock. An investor may find it difficult to obtain accurate quotations as to the market value of our common stock and trading of our common stock may be extremely sporadic. For example, several days may pass before any shares may be traded. A more active market for our common stock may never develop. In addition, if we failed to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling the common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital.

Our shares may not become eligible to be traded electronically which could result in brokerage firms being unwilling to trade them.

Our shares of common stock are eligible to be quoted on the OTC Pink Market. However, our shares are not eligible with Depository Trust Company (DTC) to trade electronically. Because we are not DTC eligible, our shares cannot be electronically transferred between brokerage accounts, the practical effect of which means that our shares will not trade much, if at all, on the OTC Pink Market. In order for our shares to trade on the OTC Pink Market, our shares would need to be traded manually between broker dealers and their accounts, which is time consuming, costly and cumbersome. We cannot guaranty that our shares will ever become DTC eligible or how long it will take to become eligible.

Additionally, because our common stock should be considered a “penny stock,” and our common stock is not traded on a national securities exchange, among other reasons, holders of our common stock may have difficulty identifying a broker-dealer willing to accept our shares for deposit. We cannot guaranty that investors will identify a broker willing to accept our shares for deposit, which would make it difficult for investors to sell their common stock.

The price of our common stock might fluctuate significantly, and you could lose all or part of your investment.

Volatility in the market price of our common stock may prevent you from being able to sell your shares of our common stock at or above the price you paid for your shares. The trading price of our common stock may be volatile and subject to wide price fluctuations in response to various factors, including:

●

actual or anticipated fluctuations in our quarterly financial and operating results;

● our progress toward developing our ~~Products~~products;

●

the commencement, enrollment and results of our future clinical trials;

●

adverse results from, delays in or termination of our clinical trials;

●

adverse regulatory decisions, including failure to receive regulatory approval;

●

publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts, if any;

● perceptions about the market acceptance of our ~~Products~~products and the recognition of our brand;

● adverse publicity about our ~~Products~~products or industry in general;

●

overall performance of the equity markets;

● introduction of ~~Products~~products, or announcements of significant contracts, licenses or acquisitions, by us or our competitors;

●

legislative, political or regulatory developments;

●

additions or departures of key personnel;

●

threatened or actual litigation and government investigations;

● ~~sale~~sales of shares of our ~~common~~Common ~~stock~~Stock by us or members of our management; and

●

general economic conditions.

These and other factors might cause the market price of our common stock to fluctuate substantially, which may negatively affect the liquidity of our common stock. In addition, from time to time, the stock market experiences price and volume fluctuations, some of which may be significant. This volatility has had a significant impact on the market price of securities issued by many companies across many industries. The changes frequently appear to occur without regard to the operating performance of the affected companies. Accordingly, the price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our share price.44

~~Securities~~These and ~~class~~other ~~action~~factors ~~litigation has~~might ~~often~~cause ~~been~~the ~~instituted~~market ~~against~~price ~~companies~~of ~~following~~our ~~periods~~Common Stock to fluctuate substantially, which may negatively affect the liquidity of ~~volatility~~our inCommon Stock. In addition, from time to time, the ~~overall~~stock market experiences price and involume fluctuations, some of which may be significant. This volatility has had a significant impact on the market price of ~~a company's~~ securities issued by many companies across many industries. The ~~This~~changes ~~litigation,~~frequently ifappear ~~instituted~~to ~~against~~occur ~~us,~~without ~~could~~regard ~~result~~to inthe ~~substantial~~operating ~~costs~~performance of the affected companies. Accordingly, ~~divert~~the price of our ~~management's~~Common ~~attention~~Stock ~~and~~could ~~resources, and~~fluctuate ~~harm~~based ~~our~~upon ~~business,~~factors ~~operating~~that ~~results~~have little or nothing to do with us, and ~~financial~~these ~~condition~~fluctuations could materially reduce our share price.

38Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result in substantial costs, divert our management’s attention and resources, and harm our business, operating results and financial condition.

We are a smaller reporting company, and the reduced reporting requirements applicable to smaller reporting companies may make our ~~common~~Common Stock ~~stock~~ less attractive to investors.

We are a “smaller reporting company” as defined in Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies, including not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley Act of 2002 (“SOX”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding nonbinding advisory votes on executive compensation, and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our ~~common stock~~Common Stock less attractive because we may rely on these exemptions. If some investors find our ~~common~~Common ~~stock~~Stock less attractive as a result, there may be a less active trading market for our ~~common~~Common ~~stock~~Stock and our stock price may be more volatile.

Our Common ~~common~~Stock ~~stock~~ is subject to the “penny stock” rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our ~~stock~~securities.

The SEC has adopted regulations which generally define a "“penny stock"” as an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The SEC'’s penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer'’s account. In addition, the penny stock rules generally require that before a transaction in a penny stock occurs, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser'’s agreement to the transaction. If applicable in the future, these rules may restrict the ability of brokers-dealers to sell our common stock and may affect the ability of investors to sell their shares, until our common stock no longer is considered a penny stock.

Concentration of ownership of our ~~common stock~~Common Stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.

Our executive officers, directors, principal stockholders and their affiliates, in the aggregate, beneficially own approximately 3975.5% of our outstanding common stock as of March 2831, ~~2022~~2023. As a result, these persons, acting together, would be able to significantly influence all matters requiring ~~stockholder~~ stockholder approval, including the election and removal of directors, any merger, consolidation, sale of all or substantially all of our assets, or other significant corporate transactions.

Some of these persons or entities may have interests different than yours. For example, they may be more interested in selling our company to an acquirer than other investors, or they may want us to pursue strategies that deviate from the interests of other stockholders.

~~We intend to issue more shares to raise capital, which will result in substantial dilution.~~45

~~Our certificate of incorporation~~We ~~authorizes~~may ~~the~~issue ~~issuance~~more ~~of a maximum of 200,000,000~~ shares ofto ~~common~~raise ~~stock and 10~~capital,~~000,000~~ ~~shares~~which ofwill ~~“blank check” preferred stock. Any additional financings effected by us may~~ result in ~~the issuance of additional securities without stockholder approval and the~~ substantial dilution ~~in the percentage of common stock held by our then existing stockholders~~. Moreover, the securities issued in any such transaction may be valued on an arbitrary or non-arm's-length basis by our management, resulting in an additional reduction in the percentage of common stock held by our current stockholders on an as converted, fully-diluted basis. Our board of directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of common stock or other securities convertible into or exchangeable for common stock are issued in connection with a financing, dilution to the interests of our stockholders will occur and the rights of the holder of common stock might be materially and adversely affected.

39Our articles of incorporation previously provided for the issuance of a maximum of 200,000,000 shares of Common Stock and 10,000,000 shares of “blank check” preferred stock but the Company has received authorization from the board of directors and majority stockholders and increased the amount of authorized Common Stock to 750,000,000 shares. Any additional financings effected by us may result in the issuance of additional securities without stockholder approval and the substantial dilution in the percentage of common stock held by our then existing stockholders. Moreover, the securities issued in any such transaction may be valued on an arbitrary or non-arm’s-length basis by our management, resulting in an additional reduction in the percentage of Common Stock held by our current stockholders on an as converted, fully-diluted basis. Our board of directors has the power to issue any or all of such authorized but unissued shares without stockholder approval. To the extent that additional shares of Common Stock or other securities convertible into or exchangeable for Common Stock are issued in connection with a financing, dilution to the interests of our stockholders will occur and the rights of the holder of Common Stock might be materially and adversely affected.

Anti-takeover provisions that may be in our charter and bylaws may prevent or frustrate attempts by stockholders to change the board of directors or current management and could make a third-party acquisition of us difficult.

Our articles ~~certificate~~ of incorporation and bylaws may contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could limit the price that investors might be willing to pay in the future for shares of our ~~common~~Common ~~stock~~Stock.

We do not intend to pay cash dividends on our ~~common~~Common ~~stock~~Stock in the foreseeable future.

We have never declared or paid cash dividends on our capital stock. Subject to any series of preferred stock we may issue in the future, we intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends on our ~~common~~Common ~~stock~~Stock in the foreseeable future. Accordingly, you may have to sell some or all of your shares of our ~~common~~Common ~~stock~~Stock in order to generate cash flow from your investment. You may not receive a gain on your investment when you sell shares and you may lose the entire amount of the investment.

Our articles of incorporation allow for our board of directors to create new series of preferred stock without further approval by our shareholders, which could adversely affect the rights of the holders of our Common Stock.

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Currently, our board of directors has the authority to designate and issue up to 10,000,000 shares of our preferred stock without further shareholder approval. In the future, our board of directors could authorize the issuance of one or more series of preferred stock that would grant to holders, among other rights, the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of Common Stock and the right to the redemption of our preferred shares acquired by such persons, together with a premium, prior to the redemption of our Common Stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our Common Stock or that is convertible into our Common Stock, which could decrease the relative voting power of our Common Stock or result in dilution to our existing shareholders.

Failure to establish and maintain an effective system of internal controls could result in material misstatements of our financial statements or cause us to fail to meet our reporting obligations or fail to prevent fraud in which case, our stockholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our stock.

~~Any~~We ~~ineffective~~have ~~internal~~assessed ~~control~~the effectiveness ~~regarding~~of our internal control over financial reporting ~~could~~as ~~have~~of anDecember ~~adverse~~31, ~~effect~~2022. onIn ~~our~~making ~~business~~this ~~and~~assessment, ~~financial~~we ~~results~~used ~~and~~the criteria set forth by the ~~price~~Committee of ~~our~~Sponsoring ~~common~~Organizations ~~stock could~~of bethe ~~negatively~~Treadway ~~affected~~Commission ~~once~~(COSO) wein ~~become~~Internal aControl-Integrated ~~registrant~~Framework ~~required~~(2013). toBased ~~file~~on this ~~registration~~assessment, ~~statements~~management ~~with~~believes ~~the~~that, ~~SEC.~~as ~~This~~of ~~reporting~~December ~~requirement could~~31, ~~also~~2022, ~~make~~the itCompany ~~more~~did ~~difficult~~not ormaintain ~~more~~effective ~~costly~~internal ~~for~~control usover tofinancial reporting ~~obtain~~because ~~certain~~of ~~types~~the effect of ~~insurance,~~material ~~including~~weaknesses ~~director~~in ~~and~~our ~~officer~~internal ~~liability insurance,~~control ~~and~~over wefinancial ~~may~~reporting. beSpecifically, ~~forced~~we toidentified ~~accept~~material weaknesses ~~reduced~~in ~~policy~~our ~~limits~~internal ~~and~~control ~~coverage~~over orfinancial ~~incur~~reporting ~~substantially~~related ~~higher~~to ~~costs~~(i) tolimited ~~obtain~~policies ~~the~~and ~~same~~procedures ~~or similar~~that ~~coverage.~~cover ~~Any~~recording ~~system~~and reporting of ~~internal~~financial ~~controls,~~transactions ~~however~~associated ~~well~~with ~~designed~~the foreign subsidiary; and ~~operated,~~(ii) islack ~~based~~of insufficient ~~part~~personnel onin ~~certain~~the ~~assumptions~~accounting ~~and~~function ~~can~~due ~~provide~~to ~~only~~our ~~reasonable,~~limited ~~not~~resources ~~absolute,~~resulting ~~assurances~~in ~~that~~lack ~~the~~of ~~objectives~~segregation of ~~the~~duties. ~~system~~The ~~are~~Company ~~met.~~engages ~~Any~~a ~~failure~~third-party orconsultant ~~circumvention~~to ofensure the ~~controls~~complete and ~~procedures~~proper orapplication ~~failure~~of togenerally ~~comply~~accepted ~~with~~accounting ~~regulation~~principles, ~~concerning~~particularly ~~control~~as ~~and~~it ~~procedures~~relates ~~could~~to ~~have~~valuation aof ~~material~~warrants ~~effect~~and onother ~~our business, results~~complex ofdebt ~~operation~~/equity ~~and financial condition~~transactions. ~~Any~~We ofplan ~~these~~to ~~events~~remediate ~~could~~those ~~result~~material inweaknesses anby ~~adverse~~(i) ~~reaction~~improving in the ~~financial~~effectiveness ~~marketplace~~of ~~due~~the toaccounting agroup ~~loss~~by ofaugmenting ~~investor~~our ~~confidence~~existing inresources ~~the~~with ~~reliability~~additional ofinternal ~~our~~accounting ~~financial~~staff ~~statements,~~to ~~which~~assist ~~ultimately~~in ~~could negatively affect~~ the ~~market~~analysis ~~price~~and recording of ~~our~~transaction and ~~shares,~~for ~~increase~~improved ~~the~~segregation ~~volatility~~ of ~~our~~duties. ~~stock~~We ~~price~~plan ~~and~~to ~~adversely~~mitigate ~~affect~~this ~~our~~identified ~~ability~~deficiency toby ~~raise~~hiring additional ~~funding.~~accounting ~~The~~staff ~~effect~~once ofwe ~~these events~~generate ~~could~~significantly ~~also~~more ~~make~~revenue itor ~~more~~raise ~~difficult~~significant ~~for~~additional usworking tocapital; ~~attract~~ and ~~retain~~(ii) ~~qualified~~improving ~~persons~~desired tosegregation ~~serve~~procedures onby ~~our~~strengthening cross ~~board~~approval of ~~directors~~various ~~and~~functions asincluding ~~executive~~quarterly ~~officers~~internal audit procedures where appropriate.

Continued ineffective internal control regarding our financial reporting could have an adverse effect on our business and financial results and the price of our Common Stock could be negatively affected. This could also make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the controls and procedures or failure to comply with regulation concerning control and procedures could have a material effect on our business, results of operation and financial condition. Any of these events could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements, which ultimately could negatively affect the market price of our shares, increase the volatility of our stock price and adversely affect our ability to raise additional funding. The effect of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors and as executive officers.

Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future. If we fail to timely achieve and maintain the adequacy of our internal control over financial reporting, we may not be able to produce reliable financial reports or help prevent fraud. Our failure to achieve and maintain effective internal control over financial reporting could prevent us from filing our periodic reports on a timely basis which could result in the loss of investor confidence in the reliability of our financial statements, harm our business and negatively impact the trading price of our common stock.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the future. This could cause the market price of our ~~common stock~~Common Stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our ~~common~~Common ~~stock~~Stock in the public market could occur at any time. If our stockholders sell, or the ~~market~~ market perceives that our stockholders intend to sell, substantial amounts of our ~~common~~Common ~~stock~~Stock in the public market, the market price of our ~~common~~ ~~stock~~Common Stock could decline significantly.

40Of the 1,242,647 shares of our Common Stock issued and outstanding as of March 31, 2023, approximately 256,245 shares are freely tradable without restriction by stockholders who are not our affiliates.

Of the 50,578,003 shares of our common stock currently issued and outstanding, approximately 5.6 million shares are freely tradable without restriction by stockholders who are not our affiliates. We issued or are deemed to have issued an aggregate of approximately 15.6 million shares of our common stock to the former Memory MD, Inc. stockholders and to the holders of convertible promissory notes upon their conversion, At the completion of the Piezo Merger, we issued approximately 29.5 million shares of our common stock to the former Piezo Motion shareholders, approximately 11.8 million shares of our common stock to the holders of Piezo Motion convertible promissory notes upon their conversion, approximately 19.3 million shares of our common stock to holders of BSI convertible promissory notes upon their conversion which were issued at or post the Piezo Merger or to the debt which was invested at closing For these issuances, among other issuances, in each case, pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, or the Securities Act, and such shares are also “restricted securities” as defined in Rule 144. Most if not all of these shares are expected to be available to register for resale in 2022, thus allowing the holders to sell their shares on the open market without restriction. In any event, substantially all of these restricted securities may be publicly resold under Rule 144.47

If securities or industry analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline.

The trading market for our ~~common~~ ~~stock~~Common Stock has been limited to date and in the future will be influenced by the research and reports that securities or industry analysts publish about us and our business. Securities or industry analysts may elect not to provide coverage of our ~~common stock~~Common Stock, and such lack of coverage may adversely affect the market price of our ~~common~~Common ~~stock~~Stock. In the event we do not secure additional securities or industry analyst coverage, we will not have any control over the analysts or the content and opinions included in their reports. The price of our stock could decline if one or more securities or industry analysts downgrade our stock or issue other unfavorable commentary or research. If one or more securities or industry analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.

~~Future~~Medicare, Medicaid, ~~sales~~health ofmaintenance ~~substantial~~organizations ~~amounts~~and ofother ~~our common~~third-party ~~stock~~payors ~~could~~are ~~adversely~~increasingly ~~affect~~attempting to contain healthcare costs by limiting both coverage and the ~~market~~level ~~price~~of reimbursement of ~~our~~new ~~common~~medical ~~stock~~devices, and, as a result, their coverage policies may be restrictive, or they may not cover or provide adequate payment for our products.

WeMedicare, Medicaid, ~~may~~health ~~choose~~maintenance toorganizations ~~raise~~and ~~additional capital~~other ~~due~~third-party topayors ~~market~~are ~~conditions~~increasingly orattempting ~~strategic~~to ~~considerations~~contain ~~even~~healthcare ifcosts weby ~~believe~~limiting both wecoverage ~~have~~and ~~sufficient~~the ~~funds~~level ~~for~~of ~~our~~reimbursement ~~current~~of ornew ~~future~~medical ~~operating plans.~~devices, ~~Furthermore~~and, ~~the~~as ~~holders~~a ofresult, ~~our~~their ~~outstanding~~coverage ~~convertible~~policies ~~notes~~ may ~~exercise~~be ~~their~~restrictive, ~~conversion~~or they ~~right~~may tonot ~~convert~~cover ~~part~~ or ~~all~~provide ofadequate ~~the outstanding~~payment ~~convertible~~for ~~notes to~~ our ~~common~~products. ~~stock~~In atorder ~~prices~~to ~~that~~obtain ~~are~~reimbursement atarrangements, ~~discount~~we ~~with~~may ~~the~~have ~~market~~to ~~price~~agree to ofa ~~our~~net ~~common~~sales ~~stock~~price ~~pursuant~~lower to than the ~~respective~~net ~~terms~~sales ofprice ~~the~~we ~~various~~might ~~convertible~~charge ~~promissory~~in ~~notes~~other sales channels. IfOur ~~additional~~revenue ~~capital~~may isbe ~~raised~~limited ~~through~~by the ~~sale~~continuing efforts of ~~equity~~government orand ~~convertible debt~~third-party ~~securities,~~payors ~~additional~~to ~~shares~~contain or reduce the costs of ~~common~~healthcare ~~stock~~through ~~are~~various ~~issued~~increasingly atsophisticated means, ~~discounted~~such ~~prices~~as ~~from~~requiring ~~the~~prospective ~~convertible~~reimbursement ~~notes,~~and orsecond ~~perceptions~~opinions, ~~that~~purchasing ~~those sales~~in groups, or ~~conversion~~redesigning ~~could~~benefits. ~~occur,~~Our future dependence on the ~~issuance~~commercial success of ~~these~~our ~~securities~~technologies ~~could~~makes ~~result~~us inparticularly ~~further~~susceptible ~~dilution~~ to ~~investors~~any ~~purchasing~~cost ~~our~~containment ~~common~~or reduction efforts. Accordingly, ~~stock~~unless inthe ~~this~~government ~~offering~~and orother ~~result~~third-party inpayors ~~downward~~provide ~~pressure~~adequate oncoverage ~~the~~and ~~price~~reimbursement offor our ~~common~~products ~~stock,~~and the related insertion and ~~our~~removal ~~ability~~procedures, toour ~~raise~~financial ~~capital~~performance inmay ~~the~~be ~~future~~limited.

General Risks

We are a development stage company with a limited operating history, making it difficult for you to evaluate our business and your investment.

Our operations are subject to all of the risks inherent in the establishment of a new business enterprise, including but not limited to the absence of an operating history, lack of fully-developed or commercialized products, insufficient capital, expected substantial and continual losses for the foreseeable future, limited experience in dealing with regulatory issues, lack of manufacturing and marketing experience, need to rely on third parties for the development and commercialization of our existing and proposed ~~Products~~products, a competitive environment characterized by well-established and well-capitalized competitors and reliance on key personnel.

We may not be successful in carrying out our business objectives. The revenue and income potential of our proposed business and operations are unproven as the lack of operating history makes it difficult to evaluate the future prospects of our business. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Accordingly, we have no track record of successful business activities, strategic decision-making by management, fund-raising ability, and other factors that would allow an investor to assess the likelihood that we will be successful in our business. There is a substantial risk that we will not be successful in fully implementing our business plan, or if initially successful, in thereafter generating material operating revenues or in achieving profitable operations.

41Foreign currency exchange rates may adversely affect our financial results.

~~Foreign~~Sales and ~~currency~~purchases ~~exchange~~in ~~rates~~currencies other than the United States. dollar expose us to fluctuations in foreign currencies relative to the United States dollar and may adversely affect our financial results. Increased strength of the United States dollar increases the effective price of our products sold in United States dollars into other countries, which may require us to lower its prices or adversely affect sales to the ~~Company’s~~extent ~~financial~~we ~~results~~do not increase local currency prices. Decreased strength of the United States dollar could adversely affect the cost of materials, products and services we purchase from non-United States denominated locations. Sales and expenses of our non-United States businesses are also translated into United States dollars for SEC reporting purposes and the strengthening or weakening of the United States dollar could result in unfavorable translation effects. We also face exchange rate risk from our investments in subsidiaries owned and operated in foreign countries.

Sales and purchases in currencies other than the U.S. dollar expose us to fluctuations in foreign currencies relative to the U.S. dollar and may adversely affect our financial results. Increased strength of the U.S. dollar increases the effective price of its products sold in U.S. dollars into other countries, which may require us to lower its prices or adversely affect sales to the extent we do not increase local currency prices. Decreased strength of the U.S. dollar could adversely affect the cost of materials, products and services we purchase from non-U.S. denominated locations. Sales and expenses of our non-U.S. businesses are also translated into U.S. dollars for SEC reporting purposes and the strengthening or weakening of the U.S. dollar could result in unfavorable translation effects. We also face exchange rate risk from its investments in subsidiaries owned and operated in foreign countries.48

Current economic and political conditions make tax rules in any jurisdiction subject to significant change.

We are subject to income taxes as well as non-income based taxes, in both the U.S. and ultimately various jurisdictions outside the U.S. where we intend to operate. We cannot predict the overall impact that changes or revisions to any such tax laws and regulations, whether in in the ~~U.S.~~United States or in jurisdictions outside the ~~U.S.~~ United States, may have on our business. We may be subject to ongoing tax audits in various jurisdictions, and the tax authorities conducting such audits may disagree with certain taxation positions we have taken and assess additional taxes. Although we intend to regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax obligations, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material adverse effect on our financial condition and business operations.

Economic and political instability around the world could adversely affect our financial condition and business operations.

Economic and political instability around the world may adversely affect our ability to develop, manufacture, market, and sell our ~~Products~~products. Our customers and suppliers may experience financial difficulties or be unable to borrow money to fund their operations which may adversely impact their ability to purchase our ~~Products~~products or services or to pay for our ~~Products~~products on a timely basis, if at all. As with our customers and suppliers, these economic conditions make it more difficult for us to accurately forecast and plan our future business activities. In addition, a significant amount of our trade receivables are with national health care systems in the ~~U.S.~~United States and in many foreign countries. Repayment of these receivables is dependent upon the political and financial stability of those countries. In light of domestic and global economic fluctuations, we continue to monitor the creditworthiness of customers located both inside and outside the UUnited States.S. Failure to receive payment of all or a significant portion of these receivables could adversely affect our financial condition and business operations.

Inflation Risk

We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations, or financial condition.

IN ADDITION TO THE ABOVE RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS ANNUAL REPORT ON FORM 10-K, POTENTIAL INVESTORS SHOULD KEEP IN MIND THAT THERE MAY BE OTHER POSSIBLE RISKS THAT COULD BE IMPORTANT.

ITEM 1B – UNRESOLVED STAFF COMMENTS

Not applicable

ITEM 2 – PROPERTIES

Our principal executive office is located in leased premises of approximately 3,562 square feet at a rental cost of $67,~~530~~320 per month at 6700 Professional Parkway, Lakewood Ranch, FL 34240. An additional leased premise which we primarily use for engineering purposes is located at 1(a) Kingsdown Business Park, Sidmouth, Devon UK EX10 OP, with approximately 550 square feet at a rental cost of GBP400 per month. We believe that ~~these~~this ~~facilities are~~facility is adequate for our needs, including providing the space and infrastructure to accommodate our development work based on our current operating plan. We do not own any real estate.

ITEM 3 – LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business.

We are not currently a party in any legal proceeding or governmental regulatory proceeding nor are we currently aware of any pending or potential legal proceeding or governmental regulatory proceeding proposed to be initiated against us that would have a material adverse effect on us or our business.

ITEM 4 – MINE SAFETY DISCLOSURES

Not applicable

ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock began being quoted and trading on March 18, 2020 on OTC Markets and is currently quoted and traded on the Pink Tier of OTC Markets under the ticker symbol BRSF. Since the commencement of trading, our common stock has been thinly and sporadically traded There can be no assurance that an active trading market for our common stock will ever develop or, if such an active market does develop, that it will be sustained.

Holders

As of March 2631, ~~2022~~2023, 501,~~578~~242,~~003~~647 shares of our common stock were issued and outstanding and held by approximately 139 holders of record.

On or about October 21, ~~and~~ December 10, 2021 and May 25, 2022, the Company issued 114,~~218~~333,~~248~~ 49,018 and 412,~~166,523~~793 options for common shares upon vesting under its 2018 Equity Incentive Plan for services rendered to an officers and directors. Such options were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering.

On or about December 30, 2021, the Company issued ~~10,485~~124 shares of restricted stock upon vesting under its 2018 Equity Incentive Plan for services rendered to an employee. Such shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering.

On or about August 12, 2022, the Company issued 303,390 options for common shares upon vesting under its 2022 Equity Incentive Plan for services rendered to an officers and directors. Such options were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering.

Dividends

We have never declared or paid any cash dividend. We do not anticipate that we will declare or pay any dividends in the foreseeable future. Our current policy is to retain earnings, if any, to fund operations, and the development and growth of our business. Any future determination to pay cash dividends will be at the discretion of our Board and will be dependent upon our financial condition, operation results, capital requirements, applicable contractual restrictions, restrictions in our organizational documents, and any other factors that our Board deems relevant.

Unregistered Sales of Equity Securities and Use of Proceeds

During the year ended December 31, ~~2021~~2022, we have issued securities that were not registered under the Securities Act, all of which were previously disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

ITEM 6 – [Reserved]

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of financial condition and results of operations of Brain Scientific Inc. together with our financial statements and the related notes included elsewhere in this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Forward Looking Statements

The following discussion should be read in conjunction with our financial statements and related notes included elsewhere in this Annual Report on Form 10-K. Certain information contained in this MD&A includes “forward-looking statements.” Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition and results of operations, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our existing and proposed business, including many assumptions regarding future events. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors, including those risks described in detail in the section entitled “Risk Factors” of this Annual Report on Form 10-K.

Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “will,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology.

In light of these risks and uncertainties, and especially given the nature of our existing and proposed business, there can be no assurance that the forward-looking statements contained in this section and elsewhere in this Annual Report on Form 10-K will in fact occur. Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Company Overview

~~The~~We ~~Company~~are is a MedTech company with two ~~cutting~~innovative ~~edge~~ product lines: ~~Neurology~~neurology and ~~Motion~~motion ~~Products~~products. Since October 1, 2021, ~~the~~we ~~Company has~~have had two direct subsidiaries, each of which is focused on one of our complimentary ~~Product~~product lines. The Neurology Products of Memory MD are designed for neurology-focused medical devices. The Motion Products of Piezo are piezoelectric motors which are fast, precise, tiny and powerful. The piezo motors are designed for and expected to have valuable and beneficial uses as motors within medical devices and devices outside of the MedTech industry. We have developed twelve motor platforms and an ultra-precise micro dosing pump, each of which is presently available commercially. We are also currently developing additional motion products that leverage our patented intellectual property.

WeThe products ~~were~~of ~~initially~~our ~~organized on~~subsidiary ~~November~~Memory 18MD, ~~2013~~Inc., ashereinafter areferred ~~Nevada~~to ~~limited~~as ~~liability company under~~ the ~~name~~Neurology ~~Global~~Products, ~~Energy~~are ~~Express~~medical ~~LLC~~devices bydesigned for the ~~filing of articles of organization~~neurology ~~with~~market. ~~the~~The ~~Secretary~~products of ~~State~~our ofsubsidiary ~~the~~Piezo ~~State~~Motion ~~of Nevada~~Corp. ~~On December 18~~, ~~2015,~~hereinafter wereferred ~~converted~~to ~~from~~as athe ~~Nevada~~Motion ~~limited~~Products, ~~liability~~are ~~company~~small ~~under~~piezoelectric ~~the~~motors ~~name~~which ~~Global~~are ~~Energy~~designed ~~Express~~for ~~LLC~~and expected to ahave ~~Nevada~~valuable ~~corporation~~and ~~under~~beneficial ~~the~~uses ~~name~~as ~~All~~motors ~~Soft~~within ~~Gels~~medical ~~Inc.~~devices ~~by the filing of articles of conversion~~ and ~~articles of~~devices ~~incorporation~~outside ~~with the Secretary~~ of ~~State of~~ the ~~State of Nevada. On September 18, 2018, we changed our name from All Soft Gels~~ ~~Inc.~~MedTech ~~to Brain Scientific Inc~~industry. ~~and changed our ticker symbol on the OTC Pink market to “BRSF”.~~

44Since the merger between Brain Scientific Inc. and Piezo Motion Corp., we have focused on building an experienced team and platform to grow revenues from existing products and introduce new technologies to the market while leveraging our store of intellectual property.

~~On September 21~~Historically, ~~2018,~~ we ~~entered~~ ~~into~~have afinanced our ~~merger~~operations ~~agreement~~principally (through the ~~“Merger~~issuance ~~Agreement”)~~of ~~with~~convertible ~~MemoryMD, Inc~~debt. ~~and~~Based ~~AFGG~~on ~~Acquisition~~our ~~Corp.~~current tooperating ~~acquire MemoryMD~~plan, ~~Inc.~~ ~~(the~~substantial ~~“Acquisition”).~~doubt ~~The~~about ~~transactions~~our ability ~~contemplated~~to bycontinue ~~the~~as ~~Merger~~a ~~Agreement~~going ~~were~~concern ~~consummated~~for ona ~~September~~period ~~21,~~of ~~2018~~at ~~and, pursuant~~least toone year from the ~~terms~~date ofthat the ~~Merger~~financial ~~Agreement,~~statements ~~all~~included ~~outstanding~~in ~~shares~~this filing ofare ~~MemoryMD~~issued ~~were~~exists. ~~exchanged~~Our ~~for~~ability ~~shares~~to ofcontinue ~~our~~as ~~common~~a ~~stock.~~going ~~Accordingly, we~~concern ~~acquired~~depends ~~100%~~on ofour ~~Memory~~ability ~~MD,~~to ~~Inc.~~raise inadditional ~~exchange~~capital, ~~for~~through the ~~issuance~~ sale of ~~shares~~equity ofor ~~our~~debt ~~common~~securities, ~~stock~~to ~~and~~support ~~MemoryMD,~~our ~~Inc~~future operations. ~~became~~If ~~our~~we ~~wholly-owned subsidiary.~~are Inunable ~~conjunction~~to ~~with~~secure ~~the~~additional ~~Acquisition~~capital, we ~~ceased~~will ~~all~~be ~~direct~~required ~~operations~~to curtail ~~and assigned all of~~ our ~~assets~~ operations and ~~liabilities~~take ~~from prior~~additional measures to ~~the~~reduce ~~Acquisition,~~costs. ~~and~~We ~~assumed~~have ~~and~~provided ~~commenced~~additional ~~the~~disclosure ~~business~~in ofNote ~~MemoryMD~~1 asto the ~~sole~~condensed consolidated ~~business~~financial ofstatements ~~the~~in ~~Company.~~and under Liquidity below.

~~The~~We were ~~financial~~initially ~~statements~~organized ~~are represented~~on ~~based~~November ~~upon~~18, ~~the~~2013 ~~Piezo~~as ~~financials~~a upNevada ~~until~~limited liability company under the ~~Piezo~~name ~~Acquisition~~Global Energy Express LLC. ~~The~~On ~~combined~~December 18, ~~company~~2015, ~~financials~~we ~~are~~converted ~~provided~~from ~~inclusive~~a ~~of the~~Nevada ~~BSI~~limited ~~operations~~liability ~~for~~company to a Nevada corporation under the ~~fourth~~name ~~quarter~~All ofSoft ~~2021~~Gels Inc. ~~The~~On ~~accounting~~September 18, is2018, ~~based~~we ~~upon~~changed ~~reverse~~our ~~merger~~name ~~accounting~~from ~~due~~All toSoft ~~the~~Gels ~~majority~~Inc. ofto ~~outstanding shares~~Brain ~~after~~Scientific ~~the~~Inc. ~~Piezo~~and ~~Acquisition~~changed ~~were~~our ~~with~~ticker symbol on the ~~Piezo~~OTC ~~shareholders~~Pink market to “BRSF”.

~~The majority of revenue in~~On ~~2021~~September is21, ~~from~~2018, ~~4th~~we ~~quarter~~entered ~~sales~~into ~~from our subsidiary which operates as~~ a ~~distributor~~merger ofagreement ~~third-party~~(the ~~medical~~“Merger ~~devices~~Agreement”) inwith ~~Russia (except~~Memory ~~for $38~~MD,~~309~~ ~~from~~Inc. ~~Piezo sales~~ and ~~$6,194~~AFGG ofAcquisition Corp. ~~sales~~to ~~from~~acquire ~~MemoryMD~~Memory inMD, Inc. (the ~~U.S.~~“Acquisition”). ~~Sales~~The oftransactions ~~$93,664~~contemplated inby ~~2020~~the ~~were~~Merger ~~based~~Agreement ~~upon~~were ~~sale of~~consummated ~~piezoelectric~~on ~~motors~~September 21, ~~including~~2018 ~~non-recurring engineering consulting~~ and, ~~software~~pursuant ~~licensing revenue. While we intend~~ to ~~continue~~ the ~~sale~~ terms of ~~third-party~~the ~~medical~~Merger ~~devices~~Agreement, weall dooutstanding ~~not~~shares ~~intend~~of ~~for~~Memory itMD towere beexchanged ~~our~~for ~~primary source~~ shares of ~~revenue~~Common ~~in the long-term~~Stock. ~~The~~Accordingly, ~~Russian~~we ~~invasion~~acquired 100% of ~~Ukraine~~ onMemory ~~February 24~~MD, ~~2022~~Inc. ~~may~~in ~~have~~exchange ~~impact~~for ~~on our ability to continue~~ the ~~Russian~~issuance ~~operations.~~of Weshares ~~also~~of ~~can~~Common ~~give~~Stock noand ~~assurance~~Memory ~~that any~~MD, ~~revenue~~Inc. webecame ~~generate~~our ~~from~~wholly-owned sosubsidiary. ~~acting~~In asconjunction awith ~~distributor~~the ~~of third-party medical devices will continue~~Acquisition, ~~will~~we ~~continue~~ceased toall bedirect ~~material~~operations orand ~~will be~~assigned ~~sufficient~~all toof ~~enable us to continue~~ our assets ~~operations.~~and Weliabilities ~~have~~from noprior ~~supply or distribution agreements in place with respect~~ to ~~such business. In~~ the ~~event~~Acquisition, ~~that~~and weassumed ~~see~~and ancommenced ~~opportunity~~the tobusiness ~~sell~~of ~~such~~Memory ~~products,~~MD weas ~~procure~~our ~~them~~sole ~~and then re-sell them~~business.

WeOn June ~~have~~11, ~~limited~~2021, ~~resources. To~~we ~~date,~~entered ~~our~~into ~~primary~~another ~~activities~~merger ~~have~~agreement ~~been~~(the ~~limited~~“Piezo ~~to,~~Merger ~~and~~Agreement”) ~~our~~with ~~limited~~Piezo ~~resources~~Motion ~~have~~Corp. ~~been~~and ~~dedicated~~BRSF Acquisition Corp. to, ~~commercializing~~acquire ~~our~~Piezo ~~piezoelectric motors,~~Motion ~~NeuroCap~~Corp. ~~and~~(the ~~NeuroEEG~~“Piezo Acquisition”). ~~performing~~The ~~business~~transactions ~~and~~contemplated ~~financial~~by ~~planning,~~the ~~raising~~Piezo ~~capital,~~Merger ~~recruiting~~Agreement were ~~personnel,~~consummated ~~and~~on ~~conducting~~October ~~development activities~~1, ~~although~~2021. wePursuant ~~have~~to ~~acted~~the asterms aof ~~distributor~~the ofPiezo ~~third-party~~Merger ~~medical~~Agreement, ~~devices~~all inoutstanding ~~Russia~~shares ~~(which~~of ~~has~~Piezo ~~generated~~Motion ~~revenue~~Corp. were exchanged for usshares inof ~~2021~~Common Stock. ~~Both~~ ~~our~~Accordingly, ~~Neurology~~we ~~Products~~acquired ~~and~~100% ~~Motion~~of ~~Products~~Piezo ~~are~~Motion ~~production~~Corp.in ~~ready~~exchange for ~~manufacture~~the ~~and~~issuance ~~sale.~~of ~~For~~shares of ~~all~~Common ~~our~~Stock ~~Products~~and wePiezo ~~have~~Motion ~~commenced some~~Corp. ~~non-recurring,~~became ~~initial~~our ~~sales~~wholly-owned subsidiary.

Our financial statements are based upon the Piezo Motion Corp. financials up until the Piezo Acquisition. The combined company financials are provided inclusive of the operations of the Company unrelated to Piezo Motion Corp. for the fourth quarter of 2021. The accounting is based upon reverse merger accounting due to the majority of outstanding shares after the Piezo Acquisition were with the Piezo shareholders.

The majority of our revenues in 2022 and 2021 was from sales from our subsidiary which until the second quarter of Fiscal 2022 operated as a distributor of third-party medical devices in Russia. With the uncertainty raised due to the continued Russian invasion of Ukraine, and with such operations no longer part of the Company’s business plan, the Company began winding down the operations of MMDR.

We have limited resources. To date, our primary activities have been limited to, and our limited resources have been dedicated to, commercializing our piezoelectric motors, NeuroCap™ and NeuroEEG. performing business and financial planning, raising capital, recruiting personnel, and conducting development activities, although we have acted as a distributor of third-party medical devices in Russia (which has generated revenue for us in 2021. Both our Neurology Products and Motion Products are production ready for manufacture and sale. For all our products we have commenced some non-recurring, initial sales.

Financial Overview

Revenue

Revenues for ~~2021~~2022 were generated ~~both~~primarily from ~~sale~~distributing ofthird-party ~~evaluation~~medical ~~kits~~devices ~~for~~in ~~piezoelectric~~Russia ~~motors~~in the amount of $38178,~~309~~431. Revenues for ~~the~~2022 ~~year.~~also ~~Revenue~~included ~~includes~~$12,628 ~~4th~~of NeuroCap ~~quarter~~sales and Piezo sales of $623,~~194 of~~505. ~~NeuroCaps~~Revenues ~~and~~for of2021 ~~$221,244~~were ~~from~~generated ~~the~~primarily ~~Russian~~from ~~subsidiary~~4th ~~for~~quarter sales distributing third-party medical devices in Russia. ~~Sales~~in ~~for piezoelectric motors reduced from 2020 as Piezo focused on~~ the ~~final~~amount ~~commercialization~~ of ~~the Blue Series of motors~~$221,244. InRevenues ~~2020,~~for ~~revenue~~2021 ~~had~~also included ~~non-recurring revenue~~$6,194 ~~from~~of ~~engineering~~NeuroCap ~~services~~sales and ~~licensing~~Piezo ofsales ~~software for approximately $66k~~ of ~~revenue~~$38,309.

General and Administrative

General and administrative expenses consist primarily of personnel-related costs for administration, product management, for personnel in functions not directly associated with sales and marketing or research and development activities. Other significant costs include rent, travel, legal fees relating to corporate matters, intellectual property costs, professional fees for consultants assisting with regulatory, product development and financial matters, and product costs. We anticipate that our general and administrative expenses will be steady in the near to support our continued commercialization of our Products and maintaining the infrastructure for a public company.

4552

Research and Development

Research and development expenses consist of expenses incurred in performing research and development activities in developing our Products. Research and development expenses include compensation and benefits for research and development employees, overhead expenses, cost of laboratory supplies, costs related to regulatory operations, fees paid to consultants, and other outside expenses. Research and development costs are expensed as incurred and costs incurred by third parties are expensed as the contracted work is performed.

We expect our research and development expenses to be maintained at the current level until we begin generating revenue from our existing Neurology and Motion Products. We anticipate it will then begin to increase as we exploit additional patents in our Motion Products and develop our Neurology Products, including conducting preclinical testing and clinical trials.

Interest Expense

Interest expense primarily consists of costs and interest costs related to the convertible notes we issued in ~~2021~~2022 and ~~2020~~2021. The convertible notes bear interest at fixed rate of 10% per annum.

Results of Operations

Comparison of the Years Ended December 31, ~~2021~~ 2022 and ~~2020~~2021

The following table sets forth the results of operations of the Company for the years Ended December 31, ~~2021~~2022 and December 31, ~~2020~~2021.

	Years Ended December 31,						Period to
	2021			2020			Period Change
	2022			2021			Period Change
Revenues	$	~~265~~214,~~747~~564		$	93265,~~664~~747		$	~~172~~(51,~~083~~183	)
Cost of goods sold	$	~~182~~160,~~519~~239		$	43182,~~762~~519		$	~~138~~(22,~~757~~280	)
Research and development	$	~~329~~301,~~452~~907		$	~~210~~329,~~706~~452		$	~~118~~(27,~~746~~545	)
Professional fees	$	~~818~~626,~~698~~578		$	~~268~~818,~~223~~698		$	~~550~~(192,~~475~~120	)
Sales and marketing	$	1696,~~041,575~~958		$	~~197~~1,~~372~~041,575		$	~~844~~(344,~~203~~617	)
General and administrative	$	6,549,980		$	2,143,089		$	4,406,891
Share based compensation	$	3,568,461		$	3,223,674		$	344,787
Interest expense	$	467,849		$	29,474		$	438,375
General and administrative	$	4,468,828		$	3,326,306		$	1,142,522
Amortization of debt discount	$	89,787		$			$	89,787
Interest expense	$	844,855		$	467,849		$	377,006
Loss on disposal of assets	$			$	4,067		$	(4,067	)
Amortization of debt discount	$	2,760,515		$	89,787		$	2,670,728
Other (Income)	$	(17,~~110~~252	)	$	(1,110	)	$	(16,~~110~~142	)
Gain on forgiveness of paycheck protection loan	$	(112,338	)	$			$	(112,338	)
Change in fair market value of derivative liabilities	$	(1,573,792	)	$	-		$	(1,573,792	)
Foreign Currency transaction loss	$	21		$			$	21
Gain on forgiveness of paycheck protection loan	$	-		$	(112,338	)	$	112,338
Gain/loss on settlement of derivatives	$	(201,097	)	$	-		$	(201,097	)
Goodwill impairment	$	913,184		$	-		$	913,184
Foreign Currency transaction loss	$	(962	)	$	21		$	(983	)

Revenues

Revenue for the fiscal year ended December 31, ~~2021~~2022 was $~~265~~214,~~747~~564 compared to $93265,~~664~~747 for the fiscal year ended December 31, ~~2020. In the fiscal years ended December 31,~~ 2021~~, we generated the majority of our revenue through acting as a distributor of third-party medical devices in Russia, and we did not have significant sales of our Products~~. The ~~increase~~ decrease in revenues in the current year resulted primarily from ~~inclusion~~decrease ofin sales of third-party medical devices in Russia.

Cost of goods sold

Cost of goods sold were $~~182~~160,~~519~~239 for the fiscal year ended December 31, ~~2021~~2022, compared to $43182,~~792~~519 for the fiscal year ended December 31, ~~2020~~2021. The ~~increased~~decrease in cost of ~~sales~~ sales was primarily due to the ~~inclusion~~reduced ~~in sales of third-party medical devices in Russia during 4th quarter~~revenues.

Research and development expenses

Research and development expenses were $~~329~~301,~~425~~907 for the fiscal year ended December 31, ~~2021~~2022, compared to $~~210~~329,~~706~~425 for the fiscal year ended December 31, ~~2020~~2021. The ~~increase~~decrease was primarily due to ana ~~increase~~reduction inof ~~product~~expenditures ~~validation~~in ~~activities and adding additional personnel to complete~~ the ~~commercialization of the Blues Series piezoelectric motors~~Ukraine.

Professional fees

Professional fees were $~~818~~626,~~698~~578 for the fiscal year ended December 31, ~~2021~~2022, compared to $~~268~~818,~~223~~698 for the fiscal year ended December 31, ~~2020~~2021. InThe ~~the~~decrease ~~fiscal~~was ~~year ended~~primarily ~~December~~due ~~31,~~to ~~2021,~~increased professional fees ~~were associated with preparation for the Piezo Acquisition, including approximately $373,000~~ in ~~legal expenses,~~2021 ~~approximately~~resulting ~~$323,000~~from ~~in accounting expenses, and approximately $67,000 of advisory expenses. In~~ the ~~fiscal~~merger ~~year~~between ~~ended~~Piezo ~~December 31, 2020, professional fees were primarily related to approximately $232,000 in legal expenses~~ and ~~approximately~~Brain ~~$35~~Scientific,~~000~~ ~~in accounting expenses~~Inc. ~~The increase in professional fees in the current year was due primarily to the Piezo Acquisition.~~

Sales and marketing expenses

Sales and marketing expenses were $1696,~~041~~958,~~575,~~ for the fiscal year ended December 31, ~~2021~~2022, compared to $~~197~~1,~~372~~041,575 for the fiscal year ended December 31, ~~2020~~2021. The ~~increase~~decrease was primarily due to ~~hiring~~a ofreduction ~~personnel~~in tobonus, ~~begin~~consulting, ~~the~~payroll ~~process~~and ofrecruiting ~~sales~~expenses ~~and~~partially ~~marketing~~offset ~~products~~by asan ~~the~~increase ~~Company~~in ~~readied~~promotion ~~for~~and advertising ~~full commercialization~~expenses.

Share based compensation

Share based compensation expenses were $3,568,461 for the fiscal year ended December 31, 2022, compared to $3,223,674 for the fiscal year ended December 31, 2021. The increase was due to the increased amount of employee stock options issued in 2022.

General and administrative expenses

General and administrative expenses were $64,~~549~~468,~~981~~828 for the fiscal year ended December 31, ~~2021~~2022, compared to $23,~~143~~326,~~089~~306 for the fiscal year ended December 31, ~~2020. In the fiscal year ended December 31,~~ 2021, general and administrative expenses included payroll expenses of approximately $1,985,000, expense associated with stock-option based compensation of approximately $3,224,000, approximately $161,000 of insurance expense, $244,000 of consulting for product engineering and system implementation and $216,000 of travel expenses. ~~In the fiscal year ended December 31,~~ ~~2020,~~The ~~general~~increase ~~and~~was ~~administrative expenses were~~ primarily ~~related~~due to ~~approximately~~increased ~~$1,429,000 in~~ payroll ~~related expenses~~, ~~approximately $321,000 in consulting fees and approximately $9,000 in~~ insurance ~~expense. The increase in spending in the fiscal year ended December 31~~, ~~2020 was primarily attributable to the stock-based compensation~~travel, ~~increased~~amortization ~~D&O insurance costs~~ and anbonus ~~increase in payroll related~~ expenses.

Interest expense

Interest expense, for the ~~fiscal~~ fiscal year ended December 31, ~~2021~~2022 was $~~467~~844,~~849~~855, ~~related~~compared to ~~the Company’s convertible and promissory notes. A further amortization of debt discount of~~ $89467,~~787~~849 ~~was expensed~~ for the ~~year ended December 31, 2021. Interest expense, for the~~ fiscal year ended December 31, ~~2020~~ ~~was $29,474, related to the Company’s convertible promissory notes~~2021. The increase was due to the ~~issuance of approximately $6.9~~ ~~million~~issuances of convertible debt during the ~~year~~years ended December 31, 2022 and 2021.

Amortization of debt discount

Amortization of debt discount for the fiscal year ended December 31, 2022 was $2,760,515, compared to $89,787 for the fiscal year ended December 31, 2021. The increase was due to the amortization of debt discounts relating to issuances of convertible debt during the years ended December 31, 2022 and 2021.

Other income and expense

Other income and expense for the fiscal year ended December 31, ~~2021~~2022 was $2,735,451, compared to $444,209 for the fiscal year ended December 31, 2021. For the year ended December 31, 2022, other income and expense was derived primarily from amortization of debt discount of $2,760,515, interest expense of $844,855 and goodwill impairment of 913,184, partially offset by gain on change in fair market value of derivatives of $1,573,792 and gain on settlement of derivatives of $201,097, other income of $7,252 and foreign currency gain of $962. For the year ended December 31, 2021, other income and expense was derived primarily from interest expense of $467,849 and amortization of debt discount ~~amortization~~ of $89,787, partially offset by gain on forgiveness of paycheck protection plan of $112,338 and other income of $1,110.

Liquidity and Capital Resources

While we have generated revenue in ~~2021~~2022, we anticipate that we will continue to incur losses for the foreseeable future. Furthermore, most of the revenue was generated through acting as a distributor of third-party medical devices in Russia, and we did not have significant sales of our Products. We anticipate that our expenses will increase substantially as we expand our sales and marketing efforts for our Products, seek further regulatory approvals, ramp manufacture of Motion Products and contract to manufacture Neurology Products.

We have incurred losses since inception and had an accumulated deficit of $22,278,923 as of December 31, 2021, primarily as a result of expenses incurred in connection with our research and development programs and from general and administrative expenses associated with our operations. We expect to continue to incur significant expenses and increasing operating and net losses for the foreseeable future.54

~~Historically,~~We have ~~our~~incurred ~~primary source~~losses since inception and had an accumulated deficit of ~~cash~~$34,622,781 ~~has~~as ~~been~~of ~~proceeds~~December ~~from~~31, ~~the~~2022, ~~sale~~primarily as a result of expenses ~~convertible~~incurred ~~promissory~~in ~~notes.~~connection ~~During~~with ~~the~~our ~~fiscal~~research ~~year~~and ~~ended~~development ~~December~~programs ~~31,~~and ~~2021~~from wegeneral ~~issued $9,718,915~~and ofadministrative ~~convertible~~expenses ~~promissory~~associated ~~notes~~with our operations. ~~Net~~We ~~cash~~expect ~~proceeds~~to ~~from~~continue ~~those~~to ~~notes~~incur ~~totaled~~significant ~~$7,219,982~~expenses and increasing operating and net losses for the foreseeable future.

WeHistorically, our ~~need~~primary tosource ~~obtain~~of ~~substantial~~cash ~~additional~~has ~~funding~~been inproceeds ~~connection~~from ~~with our~~the ~~continuing~~sale ~~operations~~of ~~through~~convertible ~~public~~promissory ornotes. ~~private~~During ~~equity~~the orfiscal ~~debt~~year ~~financings~~ended orDecember ~~other sources~~31, ~~which may include collaborations with~~ ~~third~~2022 ~~parties. However,~~ we ~~may~~issued be$5,659,500 ~~unable~~of toconvertible ~~raise~~promissory ~~additional funds when needed on favorable terms or at all~~notes. ~~Our~~Net ~~failure~~cash toproceeds ~~raise~~from ~~such capital~~those asnotes ~~and~~totaled ~~when needed would have a negative impact on our financial condition and our ability to develop and commercialize our products and future products and our ability to pursue our business strategy~~$5,100,000. ~~See “–Liquidity and Capital Requirements” below.~~

47We need to obtain substantial additional funding in connection with our continuing operations through public or private equity or debt financings or other sources, which may include collaborations with third parties. However, we may be unable to raise additional funds when needed on favorable terms or at all. Our failure to raise such capital as and when needed would have a negative impact on our financial condition and our ability to develop and commercialize our products and future products and our ability to pursue our business strategy. See “Liquidity and Capital Requirements” below.

We have also from time to time issued shares of our common stock to individuals and entities as payment for services rendered to us in lieu of cash.

We have no current source of revenue to sustain our present activities other than as acting as a distributor of medical devices in Russia which is not our primary business goal. We require successful launches of both our Neurology and our Motion products to begin to generate revenue to start supporting operations. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity (preferred stock or common stock) and debt financings as well as collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third-party partners, we may have to relinquish valuable rights to our technologies, future revenue streams or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or through collaborations, strategic alliances or licensing arrangements when needed, we may be required to delay, limit, reduce or terminate our Product development, or future commercialization efforts.

Our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, noting the existence of substantial doubt about our ability to continue as a going concern. This uncertainty arose from management'’s review of our results of operations and financial condition and its conclusion that, based on our operating plans, we did not have sufficient existing working capital to sustain operations for a period of twelve months from the date of the issuance of these financial statements.

We believe our existing cash and cash equivalents, without raising additional funds or generating revenues, will be sufficient to fund our operating expenses only to approximately ~~May~~April ~~2022~~2023.

The development of our Products is subject to numerous uncertainties, and we have based these estimates on assumptions that may prove to be substantially different than we currently anticipate and could use our cash resources sooner than we expect. Additionally, the process of developing medical devices and piezoelectric motors is costly with uncertain timing. Our ability to successfully transition to profitability will be dependent upon achieving a level of Product sales adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Net cash used in operating activities

Net cash used in operating activities was $5,~~794~~935,~~792~~070 for the year ended December 31, ~~2021~~2022 compared to $~~931~~5,~~664~~866,792 for the year ended December 31, ~~2020~~2021. This fluctuation is primarily due to increases in net loss of $63,~~297~~243,~~657~~172, gain on change in fair ~~value~~market of ~~stock~~derivatives ~~options~~of ~~vested~~$1,573,792, gain on settlement of debt of $2201,~~943~~097,~~499~~ gain on settlement of lease of $1,660, and ~~common~~a ~~stock~~decrease ~~issued~~in ~~for~~loss ~~services~~on disposal of assets of $~~280~~71,~~174~~872 partially offset by increases ain depreciation and amortization of $584,930, debt discount amortization of $2,670,728, goodwill impairment of $913,184, share based compensation of $344,788, and a decrease in ~~net~~gain on forgiveness of paycheck protection loan of $112,338, and an increase in net working capital of $~~783~~397,~~717~~347.

Net cash used in investing activities

Net cash used in investing activities was $5833,~~647~~293 and $3058,~~371~~647 for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, and consisted of the purchase of property and equipment.

Net cash provided by financing activities

Net cash provided by financing activities was $65,~~573~~930,~~849~~621 for the year ended December 31, ~~2021~~2022, which consisted of the sale of the Company’s convertible promissory notes for aggregate gross proceeds of $76,~~219~~421,~~982~~610 proceeds from convertible notes partially offset by repayment of promissory notes in the amount of $~~646~~490,~~133~~989. For the year ended December 31, ~~2020~~2021, net cash proceeds included $~~650~~3,750,000 proceeds from the sale of convertible notes, $~~100~~3,~~000~~469,982 proceeds from ~~issuance~~notes ofpayable ~~Series~~partially Coffset ~~Preferred~~by ~~Stock~~the ~~and~~repayment ~~$111,477~~ of ~~proceeds~~promissory ~~from~~notes ~~the~~of ~~paycheck protection loan program~~$574,133.

Critical Accounting Policies and Significant Judgments and Estimates

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, ~~2021~~ 2022 and December 31, ~~2020~~2021, the Company had no cash equivalents.

The Company’s cash is held with financial institutions, and the account balances may, at times, exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in such accounts with these financial institutions. As of December 31, ~~2021~~2022 and December 31, ~~2020~~2021, the Company had $~~277~~232,~~989~~332 and $0277,989, respectively, in excess over the FDIC insurance limit.

Inventory

Inventory consists of ~~finished~~raw material, works in progress and finished goods that are valued at lower of cost or market using the weighted average method.

Property and Equipment

Property, plant and equipment are carried at cost. Depreciation is provided on the straight-line method over the assets estimated service lives. Expenditures for maintenance and repairs are charged to expense in the period in which they are incurred, and betterments are capitalized. The cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are reflected in the accompanying statements of operations of the respective period. The estimated useful lives range from 3 to 7 years.

Convertible Notes Payable

The Company has issued convertible notes, which contain variable conversion features, whereby the outstanding principal and accrued interest automatically convert into common shares at a fixed price which may be a discount to the common stock at the time of conversion. Some of the conversion features of these notes are contingent upon future events, whereby, the holder agreed not to convert until the contingent future event has occurred.

Revenue Recognition

OnThe ~~January~~Company 1,recognizes revenue ~~2018,~~under ~~the~~Accounting ~~Company~~Standards ~~adopted~~Codification (“ASC”) ~~Topic~~ 606, Revenue from Contracts with Customers., ~~This~~(“ASC ~~guidance~~606”). The ~~requires~~core anprinciple ~~entity~~of tothe ~~recognize~~ revenue bystandard ~~applying~~is ~~the~~that ~~following steps: (1) identify the contract with~~ a ~~customer;~~company ~~(2)~~should ~~identify~~recognize ~~the~~revenue ~~performance~~to ~~obligations~~depict in the ~~contract;~~transfer ~~(3)~~of ~~determine~~promised ~~the~~goods ~~transaction~~or ~~price;~~services ~~(4) allocate the transaction price~~ to ~~each~~customers ~~performance obligation~~ in ~~the~~an ~~contract;~~amount ~~and~~that ~~(5)~~reflects ~~recognize~~the ~~revenue~~consideration ~~when~~to ~~each~~which ~~performance obligation is satisfied. Once~~ the ~~steps~~Company ~~are~~expects ~~met,~~to ~~revenue~~be isentitled ~~recognized,~~in ~~generally~~exchange ~~upon~~for ~~receiving~~those agoods ~~letter~~or ~~of acceptance from the customer~~services. ~~There~~ ~~has~~The ~~been~~following nofive ~~material~~steps ~~effect~~are onapplied ~~the~~to ~~Company’s~~achieve ~~financial~~that ~~statements~~core ~~as a result of adopting Topic 606.~~principle:

~~The~~● ~~Company~~Step ~~recognizes~~1: ~~revenue from~~Identify the ~~sale~~contract ofwith ~~piezoelectric~~the ~~motors,~~customer ~~NeuroCaps,~~● asStep ~~well~~2: asIdentify ~~revenue~~the ~~from~~performance obligations in the ~~sale~~contract of● ~~goods~~Step ~~purchased~~3: ~~through~~Determine ~~manufacturers~~the oftransaction ~~medical devices.~~price ~~The~~● ~~majority~~Step ~~revenue~~4: ~~for~~Allocate the ~~years~~transaction ~~ended~~price ~~December~~to ~~31,~~the ~~2021~~performance ~~ais~~obligations ~~from~~in the ~~sale~~contract of● ~~medical~~Step ~~devices~~5: ~~purchased~~Recognize ~~from~~revenue ~~Neurotech..~~when the Company satisfies a performance obligation

49In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). The Company has determined that product delivery is the primary performance obligation, and as such recognizes revenues upon delivery to the customer.

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all of the following:

	●	Variable consideration

	●	Constraining estimates of variable consideration

	●	The existence of a significant financing component in the contract

	●	Noncash consideration

	●	Consideration payable to a customer

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

Research and Development

The Company expenses all research and development costs as they are incurred. Research and development includes expenditures in connection with in-house research and development ~~salaries~~ salaries and staff costs, application and filing for regulatory approval of proposed products, regulatory and scientific consulting fees, as well as contract research, data collection, and monitoring, related to the research and development of the cloud infrastructure, data imaging, and proprietary products and technology. Research and development costs recognized in the statement of operations for the years ~~ended~~ ended December 31, ~~2021~~2022 and ~~2020~~2021 were $~~329~~301,~~452~~907 and $~~210~~329,~~706~~452, respectively.

Sales and Marketing

Advertising and marketing costs are expensed as incurred. Advertising and marketing costs recognized in the statement of operations for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 were $1696,~~041,575~~958 and $~~197~~1,~~372~~041, 575, respectively.

Stock-based Compensation

The Company measures and recognizes compensation expense for all stock-based payments at fair value over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of options and warrants. Equity-based compensation expense is recorded in administrative expenses based on the classification of the employee or vendor. The determination of fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are not required to provide the information required by this Item because we are a smaller reporting company.

5058

ITEM 8-FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

INDEX TO FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 3289)		F-2
Consolidated Balance Sheets as of December 31, 2021 and 2020		F-5
Consolidated Balance Sheets as of December 31, 2022 and 2021		F-3
Consolidated Statements of Operations and Other Comprehensive Loss for the years ended December 31,2021 and 2020		F-6
Consolidated Statements of Operations and Other Comprehensive Loss for the years ended December 31,2022 and 2021		F-4
Consolidated Statements of Stockholders’ deficit for the years ended December 31, 2021 and 2020		F-7
Consolidated Statements of Stockholders’ equity for the years ended December 31, 2022 and 2021		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020		F-8
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021		F-6
Notes to Consolidated Financial Statements.		F-97 to F-2324

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and ~~Stockholders of Brain Scientific, Inc.~~

Stockholders of Brain Scientific, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Brain Scientific, Inc. (the Company) as of December 31, ~~2021~~2022 and ~~2020~~2021, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, ~~2021~~2022, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2021~~2022 and ~~2020~~2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, ~~2021~~2022, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph Regarding Going Concern

The Accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~Critical Audit~~We ~~Matters~~have served as the Company’s auditor since 2019.

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challengingTampa, ~~subjective, or complex judgments.~~Florida

March 31, 2023

3001 N. Rocky Point Dr. East Suite 200 ● Tampa, Florida 33607 ● 813.367.3527

F-2

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Options and Warrants

The Company issued several options and warrant agreements in 2021 and amended several of those agreements in the same period.

We identified auditing the determination and valuation of the options and warrants as a critical audit matter due to significant judgments used by the Company in calculating the value, and due to the fact there were amendments to the agreements.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures included the following, among others:

● We inspected and reviewed stock option agreements and amendments and other documents to evaluate the Company’s application of relevant accounting standards to such transactions.

● We evaluated the reasonableness of the valuation model used for each specific instrument based off the terms and features of such instrument.

● We tested the reasonableness of the assumptions used by the Company in the valuation models used, including exercise price, expected term, expected volatility, and risk-free interest rate.

● We tested the accuracy and completeness of data used by the Company in creating the entries required to record the stock based compensation expense.

● We developed an independent expectation for comparison to the Company’s estimate, which included developing our own Black-Scholes Merton model.

● We evaluated the accuracy and completeness of the Company’s presentation of these instruments in the financial statements, including evaluating whether disclosures were in accordance with relevant accounting standards.

● Professionals with specialized skill and knowledge were utilized by the Firm to assist in the evaluation of the Company estimate of fair value and the development of our own independent expectations.

Accounting for Business Combination

Effective October 1, 2021, the Company acquired Piezo Motion Corp. We identified the application of acquisition method of accounting as a critical audit matter due to the complex accounting and reporting standards related to the transaction, and the estimates and assumptions used by management in determining the proper allocation of the consideration given to the assets acquired including identified intangible assets.

F-3

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures included the following, among others:

● We obtained and reviewed the merger agreement and other documents to evaluate the Company’s application of relevant accounting standards to the transaction.

● We evaluated the reasonableness of the valuation model and methodologies used to arrive at the value applied to acquired assets to include identified intangible assets of the Company and goodwill.

● We evaluated the accuracy and completeness of the Company’s presentation of the acquisition in the financial statements, including evaluating whether disclosures were in accordance with relevant accounting standards.

● Professionals with specialized skill and knowledge were utilized by the Firm to assist in the evaluation of the Company’s accounting treatment for the acquisition.

We have served as the Company’s auditor since 2021. Tampa, Florida

March 31, 2022

F-4

Brain Scientific Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

	December 31, 2021			December 31, 2020
	December 31, 2022			December 31, 2021
ASSETS
CURRENT ASSETS:
Cash	$	~~785~~747,~~363~~714		$	68785,~~943~~363
Accounts receivable		~~16,922~~947			-16,922
Inventory		~~146~~149,~~090~~558			44146,~~904~~090
Advances to officers		~~16,941~~-			716,~~542~~941
Prepaid expenses and other current assets		~~166~~409,~~458~~783			12166,~~000~~458
TOTAL CURRENT ASSETS		1,~~131~~308,~~774~~002			~~133~~1,~~389~~131,774
Property and equipment, net		~~122~~120,~~979~~914			91122,~~742~~979
Intangible assets		10,920,577			-
Intangible assets, net		10,151,172			10,920,577
Goodwill		~~913,184~~-			-913,184
Operating lease right-of-use asset		~~191~~88,~~702~~537			-191,702
Other long-term assets		95,000			-
Long-term prepaid insurance		75,000			95,000
TOTAL ASSETS	$	1311,~~375~~743,~~216~~625		$	~~225~~13,~~131~~375,216
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	2,~~987~~512,~~264~~622		$	12,~~444~~987,~~476~~264
Accounts payable and accrued expenses - related party		75,000			-
Accrued director’s fees		75,000			75,000
Accrued interest		~~356~~316,~~998~~689			26356,~~766~~998
Notes payable		320,000			650,000
Convertible notes payable, net		2,750,620			337,000
Loans payable		6,667			-
Notes payable		-			320,000
Loans payable - related party		155,989			-
Loans payable		6,667			6,667
Operating lease liability, current portion		104,591			-
Notes payable - related party		15,110			155,989
TOTAL CURRENT LIABILITIES:		4,006,509			2,121,242
Derivative liabilities		1,658,607			-
Convertible notes payable, net		9,972,551			-
Operating lease liability, current portion		83,710			104,591
Operating lease liability, net of current portion		91,089			-
TOTAL CURRENT LIABILITIES:		7,419,025			4,343,509
Paycheck protection program (PPP) loan		-			111,477
Convertible notes payable, net		-			9,635,551
TOTAL LIABILITIES		14,070,149			2,232,719
Operating lease liability, net of current portion		7,378			91,089
TOTAL LIABILITIES		7,426,403			14,070,149
Commitments and contingencies
STOCKHOLDERS' DEFICIT
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $0.001 par value; 10,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively		-			-
Preferred stock, $0.001 par value; 10,000,000 shares authorized, 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively		-			-
Common stock, $0.001 par value; 200,000,000 shares authorized, 50,217,308 and 29,520,454 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively		50,217			29,520
Common stock, $0.001 par value; 750,000,000 shares authorized, 1,242,647 and 593,410 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively		1,243			594
Additional paid in capital		2138,~~537~~942,~~763~~765			1121,~~141~~587,~~129~~386
Accumulated deficit		(2234,~~278~~622,~~923~~781	)		(1322,~~178~~278,~~237~~923	)
Accumulated other comprehensive loss		(34,~~990~~005	)		-(3,990	)
TOTAL STOCKHOLDERS' DEFICIT		(694,933	)		(2,007,588	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		4,317,222			(694,933	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	13,375,216		$	225,131
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	11,743,625		$	13,375,216

The accompanying notes are an integral part of these consolidated financial statements.

F-53

Brain Scientific Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	Years Ended December 31,
	2021			2020
	2022			2021
REVENUE	$	~~265~~214,~~747~~564		$	93265,~~664~~747
COST OF GOODS SOLD		~~182~~160,~~519~~239			43182,~~762~~519
GROSS PROFIT		8354,~~228~~325			4983,~~902~~228
SELLING, GENERAL AND ADMINISTRATIVE
OPERATING EXPENSES
Research and development		~~329~~301,~~452~~907			~~210~~329,~~706~~452
Professional fees		~~818~~626,~~698~~578			~~268~~818,~~223~~698
Sales and marketing expenses		1696,~~041,575~~958			~~197~~1,~~372~~041,575
Share-based compensation		3,~~223~~568,~~674~~461			~~311~~3,~~919~~223,674
General and administrative expenses		34,~~326~~468,~~306~~828			13,~~831~~326,~~170~~306
TOTAL SELLING, GENERAL AND ADMINISTRATIVE		8,739,705			2,819,390
TOTAL OPERATING EXPENSES		9,662,732			8,739,705
LOSS FROM OPERATIONS		(89,~~656~~608,~~477~~407	)		(28,~~769~~656,~~488~~477	)
OTHER INCOME (EXPENSE):
Interest expense		(~~467~~844,~~849~~855	)		(29467,~~474~~849	)
Amortization of debt discount		(892,~~787~~760,515	)		-(89,787	)
Loss on disposal of assets		-			(4,067	)
Goodwill impairment		(913,184	)		-
Other income		17,~~110~~252			-1,110
Gain on forgiveness of paycheck protection loan		112,338			-
Change in fair market value of derivative liabilities		1,573,792			-
Foreign currency transaction loss		(21	)		-
Gain on forgiveness of paycheck protection loan		-			112,338
TOTAL OTHER EXPENSE		(444,209	)		(33,541	)
Gain on settlement of debt		201,097			-
LOSS BEFORE INCOME TAXES		(9,100,686	)		(2,803,029	)
Foreign currency transaction gain/(loss)		962			(21	)
TOTAL OTHER INCOME (EXPENSE)		(2,735,451	)		(444,209	)
LOSS BEFORE INCOME TAXES		(12,343,858	)		(9,100,686	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS		(912,~~100~~343,~~686~~858	)		(29,~~803~~100,~~029~~686	)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment		(~~3,990~~15	)		-(3,990	)
TOTAL COMPREHENSIVE LOSS	$	(912,~~104~~343,~~676~~873	)	$	(29,~~803~~104,~~029~~676	)
NET LOSS PER COMMON SHARE
Basic and diluted	$	(012.2695	)	$	(025.1004	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic and diluted		30953,~~680,204~~272			26363,~~819,946~~497

The accompanying notes are an integral part of these consolidated financial statements.

F-64

Brain Scientific Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS'’ EQUITY (DEFICIT)

													Accumulated															~~Accumulated~~
	Series A						Series B						Series C										Additional					Other
	Common Stock						Additional Paid-in			Accumulated			Other Comprehensive
	Preferred Stock						Preferred Stock						Preferred Stock						Common Stock				Paid-in		Accumulated			Comprehensive
	Shares			Amount			Capital			Deficit			Loss			Total
	Shares			Amount			Shares			Amount			Shares			Amount			Shares		Amount		Capital		Deficit			Income			Total
Balances at December 31, 2020		349,886		$	350		$	11,170,299		$	(13,178,237	)	$	-		$	(2,007,588	)
Balances at December 31, 2019		8,118,993			8,119			7,115,089			710			14,880,641			1,488			22,536,091	$	22,536	$	10,376,391	$	(10,375,208	)	$	-		$	34,036
Recapitalization October 1, 2021		243,400			244			7,193,414			-			-			7,193,658
Sale of Series C Preferred Stock		-			-			-			-			234,796			235			-		-		53,229		-			-			53,464
Fair value of stock options vested		-			-			2,943,499			-			-			2,943,499
Warrants issued in connection with the sale of Series C Preferred Stock		-			-			-			-			-			-			-		-		46,536		-			-			46,536
Issuance of common stock for services		124			-			280,174			-			-			280,174
Issuance of common stock for director services		-			-			-			-			-			-			616,339		616		33,489		-			-			34,105
Foreign currency translation adjustment		-			-						-			(3,990	)		(3,990	)
Recapitalization at reverse merger - May 20, 2020		(8,118,993	)		(8,119	)		(7,115,089	)		(710	)		(15,115,437	)		(1,723	)		6,197,037		6,197		622,205		-			-			617,850
Net loss		-			-			-			(9,100,686	)					(9,100,686	)
Issuance of common stock for services		-			-			-			-			-			-			170,987		171		9,279		-			-			9,450
Balances at December 31, 2021		593,410		$	594		$	21,587,386		$	(22,278,923	)	$	(3,990	)	$	(694,933	)
Net loss		-			-			-			-			-			-			-		-		-		(2,803,029	)		-			(2,803,029	)
Fair value of stock options vested		-			-			3,505,850			-			-			3,505,850
Balances at December 31, 2020		-		$	-			-		$	-			-		$	-			29,520,454	$	29,520	$	11,141,129	$	(13,178,237	)	$	-		$	(2,007,588	)
Conversion of convertible debt into common shares		644,994			645			13,719,683			-			-			13,720,328
Net loss		-			-			-			-			-			-			-		-		-		(3,575,585	)		-			(3,575,585	)
Issuance of common stock for services		4,243			4			129,846			-			-			129,850
Recapitalization October 1, 2021		-			-			-			-			-			-			20,686,369		20,687		7,172,971		-			-			7,193,658
Foreign currency translation adjustment		-			-			-			-			(15	)		(15	)
Fair value of stock options and warrants vested		-			-			-			-			-			-			-		-		2,943,499		-			-			2,943,499
Net loss		-			-			-			(12,343,858	)					(12,343,858	)
Issuance of common stock for services		-			-			-			-			-			-			10,485		10		280,164		-			-			280,174
Balances at December 31, 2022		1,242,647		$	1,243		$	38,942,765		$	(34,622,781	)	$	(4,005	)	$	4,317,222
Foreign currency translation adjustment		-			-			-			-			-			-			-		-		-					(3,990	)		(3,990	)
Net loss		-			-			-			-			-			-			-		-		-		(5,525,101	)		-			(5,525,101	)
Balances at December 31, 2021		-		$	-			-		$	-			-		$	-			50,217,308	$	50,217	$	21,537,763	$	(22,278,923	)	$	(3,990	)	$	(694,933	)

The accompanying notes are an integral part of these consolidated financial statements.

F-75

Brain Scientific Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2021			2020
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(912,~~100~~343,~~686~~858	)	$	(29,~~803~~100,~~029~~686	)
Change in net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		~~219~~804,~~833~~763			17219,~~353~~833
Amortization of debt discount and non-cash interest expense		892,~~787~~760,515			-89,787
Gain on forgiveness of paycheck protection loan		(112,338	)		-
Change in fair market value of derivative liabilities		(1,573,792	)		-
Loss on disposal of assets		71,872			4,067
Goodwill impairment		913,184			-
Fair value of stock options vested		2,943,499			355,534
Gain on forgiveness of paycheck protection loan		-			(112,338	)
Common stock issued for services		280,174			-
Gain on settlement of lease		(1,660	)		-
Loss on disposal of assets		-			71,872
Fair value of stock options vested		3,568,461			2,943,499
Common stock issued for services		-			280,174
Gain on settlement of debt		(201,097	)		-
Amortization of long-term assets		20,000			-
Changes in operating assets and liabilities:
Accounts receivable		(115,~~570~~975	)		-(1,570	)
Inventory		(993,~~372~~468	)		(4499,~~904~~372	)
Advances to officers		(916,~~399~~941	)		(59,~~559~~399	)
Prepaid expenses and other current assets		(95243,~~920~~325	)		9(95,~~950~~920	)
Other long-term assets		~~(95,000~~-	)		-(95,000	)
Accounts payable and accrued expenses		~~112~~(365,~~504~~903	)		1112,~~508,158~~504
Accrued interest		-697,961			~~26,766~~-
Operating lease liabilities, net		~~(70,176~~233	)		-(70,176	)
NET CASH USED IN OPERATING ACTIVITIES	$	(5,~~866~~935,~~792~~070	)	$	(~~931~~5,~~664~~866,792	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	$	(5833,~~647~~293	)	$	(3058,~~371~~647	)
NET CASH USED IN INVESTING ACTIVITIES	$	(5833,~~647~~293	)	$	(3058,~~371~~647	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible notes payable	$	~~3,750,000~~-		$	-3,750,000
Proceeds from note payable		3,469,982			650,000
Proceeds from convertible notes payable, net of issuance costs		6,421,610			-
Proceeds from issuance of Series C Preferred Stock		-			100,000
Proceeds from note payable		-			3,469,982
Proceeds from PPP Loan		-			111,477
Repayment of related party loans		(140,989	)		-
Repayment of promissory note		(574,133	)		-
Repayment of convertible notes payable		(30,000	)
NET CASH PROVIDED BY FINANCING ACTIVITIES	$	6,645,849		$	861,477
Repayment of notes payable and interest		(320,000	)		-
Effect of exchange rate changes on cash		(3,990	)		-
Repayment of promissory note		-			(574,133	)
		-			-
NET CASH PROVIDED BY FINANCING ACTIVITIES	$	5,930,621		$	6,645,849
NET CHANGE IN CASH		716,420			(100,558	)
Effect of exchange rate changes on cash		93			(3,990	)
CASH AT BEGINNING OF THE PERIOD		68,943			169,501
					-
CASH AT END OF THE PERIOD	$	785,363		$	68,943
NET CHANGE IN CASH		(37,649	)		716,420
CASH AT BEGINNING OF THE YEAR		785,363			68,943
CASH AT END OF THE YEAR	$	747,714		$	785,363
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	$	72148,~~000~~169		$	-72,000
Cash paid for taxes	$	-		$	-
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Intangible assets recorded at acquisition	$	~~11,113,000~~-		$	-11,113,000
Goodwill recognized at acquisition	$	~~913,184~~-		$	-913,184
Shares issued for acquisition	$	~~7,240,229~~-		$	-7,240,229
Net assets assumed in merger	$	~~(1,193,499~~-	)	$	-(1,193,499	)
Convertible notes payable assumed at merger	$	2,451,641		$	-
Accounts payable settled with share issuance	$	129,850		$	-
Notes payable converted into convertible notes payable	$	4,119,982		$	-
Convertible notes payable and accrued interest converted to common shares	$	13,921,427		$	-
Notes payable assumed in merger	$	320,000		$	-
Services received settled with derivative warrants	$	156,399		$	-
Accrued interest converted into convertible notes payable	$	208,425		$	-
Convertible notes payable assumed at merger	$	-		$	2,451,641
Notes payable converted into convertible notes payable	$	-		$	4,119,982
Notes payable assumed in merger	$	-		$	320,000
Accrued interest converted into convertible notes payable	$	-		$	208,425

The accompanying notes are an integral part of these ~~unaudited condensed~~ consolidated financial statements.

F-86

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

Brain Scientific Inc. (the “Company”), was incorporated under the laws of the state of Nevada on November 18, 2013 under the name All Soft Gels Inc. On October 1, 2021, the Company acquired Piezo Motion Corp (“Piezo”), a privately held Delaware corporation formed in January 2020. Upon completion of the acquisition, Piezo is treated as the surviving entity and accounting acquirer although the Company was the legal acquirer. Accordingly, the Company’s historical financial statements are those of Piezo.. The Company has two lines of operations The MemoryMD subsidiary group is involved in cloud computing, data analytics and medical device technology in the NeuroTech and brain monitoring industries seeking to commercialize its EEG devices and caps. The Piezo subsidiary group is focused on the ultrasonic standing wave-type piezo motor technology for rotary and linear motion and has experience in the research and development, as well as the manufacturing, of piezo motors for high-tech industries across the globe. The Company is headquartered in Sarasota, Florida.

Reverse Merger and Corporate Restructure

Pursuant to the Merger, the Company issued shares of its common stock to Piezo’s stockholders, at an exchange ratio of 2.93 shares of the Company’s common stock.

F-7

Acquisition Accounting

The fair value of Brain Scientific assets acquired and liabilities assumed was based upon management’s estimates assisted by an independent third-party valuation firm.

The following table summarizes the allocation of purchase price of the acquisition: 

Tangible Assets Acquired:	Allocation
	Allocation
Net working capital		(1,186,622	)
Tangible Assets Acquired:
Net working capital	$	(1,186,622	)
Right of use asset		40,093
Lease liability		(46,970	)
Net Tangible Assets Acquired	$	(1,193,499	)
Intangible Assets Acquired:
Licenses and trademarks
Brain Scientific Trade Name		133,000
MemoryMD Trade Name		~~533~~504,000
Neurocap Trade Name		188,000
NeuroCap Trade Name		188,000
Neuro EEG Trade Name		11,000
Customer Relationships		(29,000	)
Patent products
NeuroCap Developed Technology		10,242,000
NeuroEEG Developed Technology		35,000
Total Fair Value of Assets Acquired	$	11,113,000
Net Intangible Assets Acquired	$	11,113,000
Total Fair Value of Assets Acquired	$	9,919,501
Consideration:
Fair value of equity received		7,240,222
Liabilities assumed		2,~~978~~987,152
Loans forgiven		605,311
Total consideration	$	10,832,685
Goodwill	$	913,184

~~F-9~~During the year ended December 31, 2022, as a result of an analysis of the carrying value of the recorded goodwill, the Company determined that the fair value of the goodwill was below the carrying value and as a result, recorded goodwill impairment in the amount of $913,184.

F-8

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).

Reverse Stock Split

Principles of Consolidation

The Company evaluates the need to consolidate affiliates based on standards set forth in Accounting Standards Codification (“ASC”) 810 Consolidation (“ASC 810”).

The consolidated financial statements include the accounts of the Company and its subsidiaries, Piezo Motion Corp, Discovery Technology International, Inc., MemoryMD US, MemoryMD – Russia and MemoryMD - Europe. All significant consolidated transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the useful life of property and equipment and assumptions used in the valuation of options and warrants.

The Effects of COVID-19

The World Health Organization (WHO) declared the coronavirus outbreak a pandemic on January 30, 2020. Since the outbreak in China in December 2019, COVID-19 has expanded its impact to Europe, where all of our operations reside, as well as our employees, suppliers and customers. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration of the closings and shelter-in-place orders and the ultimate impact of governmental initiatives. However, the financial impact and duration cannot be reasonably estimated at this time.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, ~~2021~~2022 and ~~December 31~~2021, ~~2020,~~ the Company had no cash equivalents.

The Company’s cash is held with financial institutions, and the account balances may, at times, exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit. Accounts are insured by the FDIC up to $250,000 per financial institution. The Company has not experienced any losses in such accounts with these financial institutions. As of December 31, ~~2021~~2022 and ~~December 31~~2021, ~~2020,~~ the Company had $~~277~~231,~~989~~332 and $0277,989, respectively, in excess over the ~~FDIC~~ FDIC insurance limit.

Inventory

Inventory consists of raw material, works in progress and finished goods that are valued at lower of cost or market using the weighted average method.

F-109

Property and Equipment

Intangible assets, net

Intangible assets are measured at cost less accumulated amortization and impairment losses, if any.

Intangible assets are amortized on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. The estimated useful lives, residual values, and amortization methods are reviewed at each year end, and any changes in estimates are accounted for prospectively.

Patents		15 years
Licenses and trademarks		9 years

Amortization expense is included in the consolidated income statement within general and administrative expenses.

The asset is tested annually and during interim periods for impairment if there is a trigger for impairment.

Goodwill

Goodwill represents the excess of the consideration transferred over the fair value of the net identifiable assets acquired. Goodwill is evaluated for impairment annually or whenever we identify certain triggering events or circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Events or circumstances that might indicate an interim evaluation is warranted include, among other things, unexpected adverse business conditions, macro and reporting unit specific economic factors (for example, interest rate and foreign exchange rate fluctuations, and loss of key personnel), supply costs, unanticipated competitive activities, and acts by governments and courts.

Convertible Notes Payable

Leases

The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. Variable lease expenses, if any, are recorded when incurred.

Revenue Recognition

OnThe ~~January 1, 2018, the~~ Company ~~adopted~~recognizes revenue ~~ASC~~under ~~Topic 606~~ASC606, Revenue from Contracts with Customers., ~~This~~(“ASC ~~guidance~~606”). ~~requires~~The ancore ~~entity~~principle toof ~~recognize~~the revenue bystandard ~~applying~~is ~~the following steps:~~ that ~~(1) identify the contract with~~ a ~~customer;~~company ~~(2)~~should ~~identify~~recognize ~~the~~revenue ~~performance~~to ~~obligations~~depict in the ~~contract;~~transfer ~~(3)~~of ~~determine~~promised ~~the~~goods ~~transaction~~or ~~price; (4)~~services ~~allocate the transaction price~~ to ~~each~~customers ~~performance obligation~~ in ~~the~~an ~~contract;~~amount ~~and~~that ~~(5)~~reflects ~~recognize~~the ~~revenue when each performance obligation~~consideration isto ~~satisfied.~~which ~~Once~~ the ~~steps~~Company ~~are~~expects ~~met,~~to ~~revenue~~be isentitled ~~recognized,~~in ~~generally~~exchange ~~upon~~for ~~receiving~~those agoods ~~letter~~or ~~of acceptance from the customer~~services. ~~There has~~The ~~been~~following nofive ~~material~~steps ~~effect~~are onapplied ~~the~~to ~~Company’s~~achieve ~~financial~~that core ~~statements as a result of adopting Topic 606.~~principle:

~~The~~● ~~Company~~Step ~~recognizes~~1: ~~revenue~~Identify ~~from~~the contract with the ~~sale~~customer ~~of NeuroCaps,~~● asStep ~~well~~2: asIdentify ~~revenue~~the ~~from~~performance obligations in the ~~sale~~contract of● ~~goods~~Step ~~purchased~~3: ~~through~~Determine ~~manufacturers~~the oftransaction ~~medical~~price ~~devices.~~● ~~All~~Step ~~revenue~~4: ~~for~~Allocate the ~~years~~transaction ~~ended December~~price ~~31,~~to ~~2021~~the ~~and~~performance ~~2020~~obligations isin ~~from~~ the ~~sale~~contract of● ~~medical~~Step ~~devices~~5: ~~purchased~~Recognize ~~from~~revenue ~~Neurotech,~~when the Company satisfies a ~~related~~performance ~~party.~~obligation

F-10

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct), and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). The Company has determined that product delivery is the primary performance obligation, and as such recognizes revenues upon delivery to the customer.

If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct.

	●	Variable consideration

	●	Constraining estimates of variable consideration

	●	The existence of a significant financing component in the contract

	●	Noncash consideration

	●	Consideration payable to a customer

Research and Development

The Company expenses all research and development costs as they are incurred. Research and development includes expenditures in connection with in-house research and development salaries and staff costs, application and filing for regulatory approval of proposed products, regulatory and scientific consulting fees, as well as contract research, data collection, and monitoring, related to the research and development of the cloud infrastructure, data imaging, and proprietary products and technology. Research and development costs recognized in the statement of operations for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 were $~~329~~301,~~452~~907 and $~~210~~329,~~706~~452, respectively.

Sales and Marketing

Stock-based Compensation

Basic and Diluted Net Loss Per Common Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon exercise of common stock equivalents such as stock options, warrants and convertible debt instruments. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. As a result, the basic and diluted per share amounts for all periods presented are identical. In the years ended December 31, 2021 and 2020, 7,156,406 and 0, respectively, of anti-dilutive securities were excluded from the computation.

F-11

Basic and Diluted Net Loss Per Common Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon exercise of common stock equivalents such as stock options, warrants and convertible debt instruments. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. As a result, the basic and diluted per share amounts for all periods presented are identical. In the years ended December 31, 2022 and 2021, 131,978 and 84,193, respectively, of anti-dilutive securities were excluded from the computation.

Reclassification

Certain prior years balances have been reclassified to conform to current year presentation.

Fair Value of Financial Instruments

The Company’s financial instruments are measured and recorded at fair value based on inputs and assumptions that market participants would use in pricing an asset or a liability. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, management considers the principal or most advantageous market in which the Company would transact, and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance.

Fair value is determined for assets and liabilities using a three-tiered value hierarchy into which these assets and liabilities are grouped based upon significant inputs as follows:

●

Level 1 - Quoted prices in active markets for identical assets or liabilities.

●

Level 2 - Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

●

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the lack of significance of the observable parameters to the overall fair value measurement. However, the fair value determination for Level 3 financial instruments may consider some observable market inputs.

The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. The carrying values of cash, prepaid expenses and other current assets, convertible notes, accounts payable, loans payable and due to others approximate fair value due to the short-term nature of these items.

As of December 31, 2022, the Company had a Level 3 financial instrument related to the derivative liabilities related to the issuance of convertible debt and warrants. The Company did not have any Level 1, Level 2 or Level 3 assets or liabilities as of December 31, 2021 ~~and 2020~~.

F-12

Income Taxes

The Company accounts for income taxes using the asset-and-liability method in accordance with ASC Topic 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the enactment date. A valuation allowance is recorded if it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized in future periods.

The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely-than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. As of December 31, ~~2021,~~2022 and ~~December 31~~2021, ~~2020,~~ the Company had no unrecognized uncertain income tax positions.

F-12

Recent Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on the Company'’s financial position or results of operations upon adoption.

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Measurement of Credit Losses on Financial Instruments,” which requires measurement and recognition of expected credit losses at the point a loss is probable to occur, rather than expected to occur, which will generally result in earlier recognition of allowances for credit losses. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-13 in the first quarter of 2020 and the adoption did not have a material impact on its consolidated financial statements.

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern for a period of one year from the issuance of these financial statements. For the year ended December 31, ~~2021~~2022, the Company had $~~265~~214,~~747~~564 in revenues, a net loss of $912,~~100~~343,~~686~~858 and had net cash used in operations of $5,~~794~~935,~~792~~070. Additionally, as of December 31, ~~2021~~2022, the Company had working capital deficit, stockholders’ ~~deficit~~equity and accumulated deficit of $26,~~874~~111,~~735~~023, $~~694~~4,~~933~~317,222 and $2234,~~278~~622,~~923~~781, respectively. It is management’s ~~opinion~~ opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of ~~twelve~~ twelve months from the date of the issuance of these financial statements.

The financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.

Successful completion of the Company’s development program and, ultimately, the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to fulfill its development activities, acceptance of the Company’s patent applications and ultimately achieving a level of sales adequate to support the Company’s cost structure. However, there can be no assurances that the Company will be able to secure additional equity investments or achieve an adequate sales level.

NOTE 4 – INVENTORY

	December 31, 2021		December 31, 2020
	December 31, 2022		December 31, 2021
Raw materials	$	9376,~~190~~264	$	2093,~~608~~190
Parts		11,~~857~~886		211,~~349~~857
Finished goods		4161,~~043~~408		2141,~~947~~043
Total	$	~~146~~149,~~090~~558	$	44146,~~904~~090

NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

	December 31, 2021		December 31, 2020
Prepaid insurance	$	105,900	$	-
Other prepaid expenses		46,170		7,000
Lease deposits		14,378		5,000
Other assets		10		-
Total	$	166,458	$	12,000

As of December 31, 2021 and 2020, there was a total amount of $95,000 and $0 of long-term prepaid insurance, respectively.

F-13

NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

	December 31, 2022		December 31, 2021
Prepaid insurance	$	75,496	$	105,900
Prepaid inventory		214,372		-
Other prepaid expenses		30,537		46,170
Legal retainer		75,000		-
Lease deposits		14,378		14,378
Other assets		-		10
Total	$	409,783	$	166,458

As of December 31, 2022 and 2021, there was a total amount of $75,000 and $95,000 of long-term prepaid insurance, respectively.

NOTE 6 – PROPERTY AND EQUIPMENT

Property and equipment, net consists of the following:

	December 31, 2021			December 31, 2020
	December 31, 2022			December 31, 2021
Computer equipment	$	-		$	4,164
Machinery and equipment	$	209,971		$	176,678
Machinery and equipment		176,678			121,433
Leasehold improvements		12,283			12,283
Leasehold improvements		12,283			5,000
		222,254			188,961
		188,961			130,597
Less: Accumulated depreciation		(101,340	)		(65,982	)
Less: Accumulated depreciation		(65,982	)		(38,855	)
Total	$	120,914		$	122,979
Total	$	122,979		$	91,742

Depreciation expense was $2735,~~410~~358 and $1727,~~353~~410 for the year ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively.

NOTE 7 – INTANGIBLE ASSETS, NET

Pursuant to the Merger, the Company accounted for the transaction as a reverse acquisition as prescribed in Accounting Standards Codification 805, Business Combinations (“ASC 805”) and ASC 820 – Fair Value Measurements and Disclosures (“ASC 820”).

The following table summarizes the allocation of purchase price of the acquisition:

Tangible Assets Acquired:	Allocation
Net working capital	$	(1,186,622	)
Right of use asset		40,093
Lease liability		(46,970	)
Net Tangible Assets Acquired	$	(1,193,499	)
Intangible Assets Acquired:
Brain Scientific trade name	$	133,000
MemoryMD trade name		533,000
Neurocap trade name		188,000
Neuro EEG trade name		11,000
Customer relationships		(29,000	)
NeuroCap developed technology		10,242,000
NeuroEEG developed technology		35,000
Total Fair Value of Assets Acquired	$	11,113,000
Consideration:
Fair value of equity received		7,240,222
Liabilities assumed		2,978,152
Loans forgiven		605,311
Goodwill	$	913,184

F-14

The components of the acquired intangible assets were as follows:

	Preliminary			Average
	December 31, 2022			December 31, 2021			Average Estimated Life
	Fair Value			Estimated Life
Patent products	$	10,277,000		$	10,277,000			15
Patent products		$ 10,277,000		3.3 - 15.4
Licenses and trademarks		836,000			836,000			9
Licenses and trademarks		865,000		9
Intangible assets	$	11,113,000		$	11,113,000
Customer/distribution list		(29,000)		12.5
Less: Accumulated amortization		(961,828	)		(192,423	)
	$	11,113,000
Total	$	10,151,172		$	10,920,577
Accumulated amortization		(192,423	)
Total		10,920,577

Amortization expense was $769,405 and $192,423 for the years ended December 31, 2022 and 2021, respectively.

F-14

NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable as of December 31, ~~2021~~2022 and ~~2020~~ 2021 consisted of the following:

	December 31, 2021		December 31, 2020
	December 31, 2022		December 31, 2021
Trade payables	$	1,~~101~~075,~~028~~530	$	~~398~~1,~~155~~101,028
Accrued payroll and related expenses		1,~~593~~306,~~925~~386		~~997~~1,~~410~~593,925
Accrued expenses		~~255~~121,~~820~~488		48255,~~911~~820
Customer deposits		369,~~491~~218		-36,491
Total	$	2,~~987~~512,~~264~~622	$	12,~~444~~987,~~476~~264

NOTE 9 – ~~ACCOUNTS~~CONVERTIBLE NOTES PAYABLE ~~AND ACCRUED EXPENSES~~ – ~~RELATED~~SHORT ~~PARTY~~TERM

Accounts payable related parties as of December 31, 2021 consists of accrued director’s fees in the amount of $75,000. There was no balance at December 31, 2020.

NOTE 10 – NOTES PAYABLE

As part of the merger, the Company assumed the following two notes payable:

February 21, 2020 Note

On February 21, 2020, a third party loaned the Company $20,000, evidenced by a non-convertible promissory note (the “February Note”). The February Note bears interest at a fixed rate of 12% per annum, computed based on a 360-day year of twelve 30-day months, which interest will be payable quarterly until the maturity date. The principal outstanding and any accrued and unpaid interest due under the February Note were due on February 22, 2022. The Company recorded $3,593 of accrued interest and has a total outstanding principal balance of $20,000 as of December 31, 2021. The February note and accrued interest was repaid on February 22, 2022.

December 28, 2020 Note

On December 28, 2020, the Company entered into a Securities Purchase Agreement (the “December Purchase Agreement”) dated as of December 28, 2020 (the “December 28 Issuance Date”) and issued and sold to an investor a Promissory Note (the “December 28 Note”) in the aggregate principal amount of $300,000. Pursuant to the December Purchase Agreement, in connection with the issuance of the December 28 Note, the Company issued two common stock purchase warrants (separately, “Warrant A” and “Warrant B”, and together, the “December Warrants”) to the investor, allowing the investor to purchase an aggregate of 500,000 shares of the Company’s common stock, with Warrant A being a commitment fee of 250,000 shares of common stock, and Warrant B being fully earned upon issuance as an additional commitment fee of 250,000 shares of common stock, provided that Warrant B is returnable to the Company upon the repayment of the December 28 Note, as an additional incentive for the repayment of the December 28 Note.

F-15

The net amount received by the Company during the year ended December 31, 2020 was approximately $265,000 after payment of certain fees to the investor or on behalf of the investor. The December 28 Note bears interest commencing on the December 28 Issuance Date at a fixed rate of 12% per annum on any unpaid principal balance, and will be payable, along with the principal amount, on December 28, 2021. At issuance, the Company recorded debt discount of $300,000 related to the December 28 Note. Amortization of the debt discount is recorded as interest expense and a total of $73,151 was amortized during the year ended December 31, 2021.

The initial maturity date for the December 28 Note was December 28, 2021. On December 28, 2021, the Company signed an allonge with the investor amending the note. The terms of the amended note provided for two equal payments of $184,800, due on February 28, 2022 and March 31, 2022.

The December 28 Note contains customary events of default which entitle the investor, among other things, to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the December 28 Note. Upon an event of default, interest shall accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. The December 28 Note further contains monetary penalties in the event of certain events of default or breaches.

The December Warrants each have an exercise price of $1.20, subject to customary adjustments, and may be exercised at any time until the three-year anniversary of the December Warrants; provided, however, in the event the Company repays the December 28 Note in its entirety on or prior to the maturity date of the December 28 Note, Warrant B shall automatically expire and may only be exercised in the event it does not so automatically expire. The December Warrants include a cashless exercise provision as set forth therein.

Notes payable as of December 31, 2020 amounted to $650,000 and are described in Note 11 below. They were converted into convertible notes payable at the merger on October 1, 2021.

NOTE 11 – CONVERTIBLE NOTES PAYABLE, NET

2020 Notes

In July 2020, Motion made an offering of convertible notes not to exceed approximately $2,400,000. In October and extended in April, June and August 2021, the Board authorized increasing the potential investment to not exceed $5,000,000. These notes are payable by October 13, 2021, interest accruing at 10% per annum. At the completion of a qualifying investment, the Company, at its sole discretion may convert the loans and any accrued interest to common stock with a 120% multiplier on the value of the common stock in the qualifying investment. As of September 30, 2021 and December 31, 2020, the carrying amount of these notes was $4,119,982 and $650,000, respectively with accrued interest of $208,480 and $26,766, respectively. On October 1, 2021, the outstanding balances and accrued interest were exchanged for new notes payable as part of the merger.

2021 Notes

In conjunction with the closing of the Merger on October 1, 2021, the Company conducted an initial closing under a private offering (the “Offering”) of 10% convertible promissory notes due and payable on April 1, 2023 (the “2021 Notes”). As part of the Offering, the Company exchanged the 2020 Notes and accrued interest as well as additional notes issued in 2021 with the same terms as the 2020 Notes and their accrued interest amounting to $4,328,407, as well as $1,540,508 of debt assumed in the merger into 2021 Notes. At the merger, the Company also issued a convertible promissory note to an investor in the amount of $2,950,000 with proceeds of $2,850,000 net of an original issuance discount, with the same terms as the 2021 Notes. Each holder of the 2021 Notes, provided that the note is still then outstanding, will be issued, on the earlier of (i) the date, if any, upon which the Company’s common stock is listed for trading on the NASDAQ stock exchange (the “Uplist”), and (ii) the date that is eighteen months from the date of issuance, a warrant to purchase an amount of shares of the Company’s common stock, equal to such holder’s Warrant Share Amount. For purposes of the foregoing, a holder’s “Warrant Share Amount” means (i) if such Warrant is issued in connection with the Uplist, one half of the initial principal balance of such Holder’s Note at issuance divided by the lesser of (A) $0.40, and (B) and the greater of (x) $0.20 and (y) one hundred twenty percent (120%) of the closing price for the Company’s common stock on the trading day prior to the date of the Uplist, and (ii) if such Warrant is issued otherwise than in connection with the Uplist, the initial principal balance of such Holder’s Note, divided by the lesser of (A) $0.40, and (B) and the greater of (x) $0.20 and (y) one hundred twenty percent (120%) of the volume weighted average price (“VWAP”) for the Company’s common stock over the five consecutive trading days immediately preceding the date that is eighteen months from the date of issuance. The 2021 Notes contain mandatory and voluntary conversion features as detailed in the agreement.

F-16

On December 21, 2021, the Company consummated the second closing of the Offering whereby the Company entered into a Securities Purchase Agreement (the “SPA”) with three accredited investors, pursuant to which the investors purchased from the Company, 2021 Notes in the principal amount of $900,000.

As of December 31, 2021, the total amount of 2021 Notes principal outstanding was $9,718,915.

Assumed convertible debt

As part of the terms of the Piezo and Brain Scientific merger, the Company assumed $891,133 of outstanding convertible debt. During the fourth quarter of 2021, the Company paid off $574,133, and signed an amendment to one of the debt agreements increasing the debt by $20,000, resulting in an outstanding balance of the assumed convertible debt as of December 31, 2021 of $337,000. The assumed convertible debt is made up of the 2019 Note and the Convertible Grid note whose terms are described below. During the year ended December 31, 2022, the Company converted the Grid Notes totaling $250,000 into common stock, added $33,000 of accrued interest to the 2019 Note principal as per an amendment to the agreement, and paid off $60,000 of principal of the 2019 Note, resulting in a balance of $60,000 at December 31, 2022.

2019 Note

On December 31, 2019, the Company entered into a Securities Purchase Agreement and issued and sold to a third party a Convertible Note in the original principal amount of $275,000 (the “Note”), and a warrant to purchase ~~100~~1,~~000~~176 shares of the Company’s common stock (the “Warrant”). A one-time interest charge of 8% was applied on December 31, 2019 and will be payable, along with the Principal, on the maturity date.

On December 30, 2021, the Company signed an allonge amending the Note extending the maturity date to April 30, 2022 and amending the outstanding balance and payment schedule to provide for two equal payments of $60,000 on March 31, 2022 and April 30, 2022. ~~The~~On ~~outstanding~~March ~~principal~~31, 2022 the Company signed an allonge amending the Note, extending the maturity date to December 31, 2022 and amended the outstanding balance asand payment schedule to provide for seven monthly payments of $10,000 plus interest at the rate of 14% per annum. The first monthly payment is payable on June 30, 2022. A final payment of $50,000 plus interest is due upon maturity. During the year ended December 31, ~~2021~~2022, the ~~was~~Company added accrued interest of $8733,000 to the 2019 Note principal as per an amendment to the agreement, and paid off $60,000 of principal of the 2019 Note, resulting in a balance of $60,000 at December 31, 2022.

The unpaid outstanding principal amount and accrued and unpaid interest under the Note shall be convertible into shares of the Company’s common stock at any time at the option of the investor. The conversion price was set at the merger to $023.2880 which is equal to 80% multiplied by the price per share used in the merger calculations.

F-15

The Note contains a price-based anti-dilution provision, pursuant to which the conversion price of the Note shall be reduced upon the occurrence of certain dilutive issuances of Company securities as set forth in the Note. The conversion of the Note is also subject to a beneficial ownership limitation of 4.99% of the number of shares of common stock outstanding immediately after giving effect to such conversion. In the event the Company, prior to the maturity date of the Note, issues any Security (as defined in the Note) with any term more favorable to the holder of such Security or with a term in favor of the holder of such Security that was not similarly provided to the Investor, then at the Investor’s option such term shall become a part of the Note. The Company also agreed to provide piggy-back registration rights to the investor pursuant to which the Company shall include all shares issuable upon conversion of the Note on the next registration statement the Company files with the Securities and Exchange Commission.

The Note contains events of default which, among other things, entitle the Investor to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Note. Upon the occurrence of any event of default, the outstanding balance shall immediately and automatically increase to 130% of the outstanding balance immediately prior to the event of default, and the conversion price of the Note shall be redefined to equal 65% of the lowest trade accruing during the 10 consecutive Trading Days (as defined in the Note) immediately preceding the applicable Conversion Date (as defined in the Note). Nickolay Kukekov, a director of the Company, and a third party, each has personally guaranteed the repayment of the Note.

The Warrant has an exercise price of $1106.25 per share (the “Exercise Price”), subject to adjustments as provided in the Warrant, and has a term of five years. The Warrant contains a price-based anti-dilution provision, pursuant to which the exercise price of the Warrant shall be reduced upon the occurrence of certain dilutive issuances of securities as set forth in the Warrant, with a corresponding increase in the number of shares underlying the Warrant if the dilutive event occurs during the first three years of the Warrant, and a cashless exercise provision. The exercise of the Warrant is subject to a beneficial ownership limitation of 9.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise.

F-17

Convertible Grid Notes

On April 21, 2020, the Company issued a Convertible Grid Promissory Note (the “Caleca Note”) to Thomas J. Caleca (“Caleca”), an existing stockholder of the Company, pursuant to which Caleca agreed to advance to the Company the aggregate principal amount of $125,000 (the “Caleca Aggregate Advance”). The Company also issued to Caleca a common stock purchase warrant (the “Caleca Warrant”), granting Caleca the right to purchase up to ~~750~~8,~~000~~824 shares of the Company’s common stock at a per share exercise price of $068.80 00 (subject to adjustment as set forth in the Caleca Warrant).

Also on April 21, 2020, the Company issued a Convertible Grid Promissory Note (the “Brown Note”, and together with the Caleca Note, the “Grid Notes”) to Andrew Brown (“Brown”, and together with Caleca, the “Grid Investors”), an existing stockholder of the Company, pursuant to which Brown agreed to advance to the Company the aggregate principal amount of $125,000 (the “Brown Aggregate Advance”, and together with the Caleca Aggregate Advance, the “Aggregate Advance”). The Company also issued to Brown a common stock purchase warrant (the “Brown Warrant”, and together with the Caleca Warrant, the “Grid Warrants”), granting Brown the right to purchase up to ~~750~~8,~~000~~ 824 shares of the Company’s common stock at a per share exercise price of $068.8000 (subject to adjustment as set forth in the Brown Warrant). The Grid Warrants are exercisable at any time commencing on the eighteen-month anniversary of the issuance of the Grid Warrants (as may be accelerated pursuant to the terms of the Grid Warrants) and expiring on the five-year anniversary of the issuance of the Grid Warrants. In 2021, the terms of the Grid Warrants were amended extending the first date of exercise to October 21, 2022.

The Grid Notes bear interest on the unpaid balances at a fixed simple rate of twelve percent (12%) per annum (subject to a rate increase if the Company commits an Event of Default (as defined in the Grid Notes)), computed based on a 360-day year of twelve 30-day months, commencing on the date of the respective advance and payable quarterly. The principal amount of the Aggregate Advance, or so much thereof as has been advanced to the Company by the Grid Investors from time to time pursuant to the Grid Notes, ~~will~~was be payable on April 21, 2021, ~~unless~~which ~~sooner~~was ~~converted~~amended ~~into~~to ~~shares~~April 21, 2022. As of December 31, 2021, the Company~~’s common~~ ~~stock~~had ~~pursuant~~a tototal ~~the~~outstanding ~~terms~~principal balance of ~~the~~$250,000 ~~Grid~~and ~~Notes.~~accrued ~~The~~interest ~~Company~~of ~~recorded~~ $28,032, ofrespectively. ~~accrued~~On ~~interest~~April ~~and~~20, ~~has~~2022, athe Grid ~~total~~Notes ~~outstanding~~and ~~principal balance~~accrued ofinterest ~~$250~~were converted into 3,~~000~~380 asshares of ~~December~~common ~~31, 2021~~stock.

The unpaid outstanding principal amount and accrued and unpaid interest under the Grid Notes shall be convertible at any time prior to the maturity date of the Grid Notes at the election of the Grid Investors into such number of shares of the Company’s common stock obtained by dividing the amount so converted by $1.00 (the “Conversion Price”). At the maturity date of the Grid Notes, all of the remaining unpaid outstanding principal amount and accrued and unpaid interest (the “Outstanding Balance”) under the Grid Notes shall automatically convert into such number of shares of the Company’s common stock obtained by dividing the Outstanding Balance by the Conversion Price. The Grid Notes may not be prepaid by the Company in whole or in part without the prior written consent of the respective Grid Investor.F-16

~~The Grid Notes contain customary events of default,~~2022 ~~which, if uncured, entitle the Grid Investors to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, their Grid~~ Notes.

~~NOTE~~On June 1213, –2022, ~~LOANS~~the ~~PAYABLE~~Company consummated the first closing of a private placement offering whereby the Company entered into a Securities Purchase Agreement (SPA), dated as of June 13, 2022 with thirteen accredited investors, pursuant to which the investors purchased from the Company, for an aggregate purchase price of $5,110,000, (i) 10% Original Issue Discount Senior Secured Convertible Debentures (the “2022 Notes”), in the principal amount of $5,659,500 and (ii) 222,311 warrants to purchase shares of common stock of the Company at the same price as the debt conversion price. In addition, 23,713 warrants were issued to the book-runner ~~RELATED~~of ~~PARTY~~this offering (together with the 222,311 investor warrants – the “2022 warrants”). The 2022 Notes mature on June 13, 2023 and bear interest at an annual rate of 10%. Due the issuance costs and the derivatives associated with the 2022 Notes (see below), the Company recorded a debt discount of 4,470,289, which will be amortized using the effective interest method over the life of the loan. During the year ended December 31, 2022, the Company recorded discount amortization in the form of interest expense in the amounts of $1,501,409. The balance of the discount at December 31, 2022 was $2,968,880.

AsThe 2022 ~~part~~Warrants ofshall ~~the~~be ~~merger,~~exercisable ~~the~~at ~~Company~~any ~~assumed~~time ~~$155,989 of~~on ~~related~~or ~~party~~after ~~loans~~the ~~from~~earlier ~~entities~~of ~~related~~(i) to the ~~former~~maturity ~~executives~~date; ~~and~~or ~~directors~~(ii) the ~~Company.~~closing ~~These~~of ~~loans~~a doregistered offering ~~not~~of ~~bear~~the ~~interest~~Company’s ~~and had~~securities anfor ~~initial~~aggregate ~~maturity~~gross ~~date~~proceeds ofto ~~December~~the ~~31,~~Company ~~2021.~~of Onat ~~March~~least 9$5, ~~2022~~000,000, resulting in the ~~loans~~listing for ~~were~~trading ~~amended~~of tothe ~~adjust~~Common Stock on the ~~interest~~NYSE ~~rate~~American toor 9%The ~~per~~Nasdaq ~~annum~~Capital Market (the “Qualified Offering”), and toon ~~extend~~or ~~the~~prior to ~~maturity~~December ~~dates~~13, to2028 ~~provide~~(if ~~for~~no ~~payments~~Qualified ofOffering ~~$53,000~~has ~~with~~been ~~accrued~~consummated ~~interest~~occurred on ~~March~~or ~~31,~~prior ~~2022~~to ~~and~~the ~~June~~maturity 1,date of the 2022, ~~and~~Notes) aor ~~payment~~the ofdate ~~$49,000~~that ~~plus~~is ~~accrued~~five ~~interest~~years onand ~~August~~nine 1,months ~~2022~~following the closing of the Qualified Offering.

The 2022 Notes contain mandatory and voluntary conversion features as follows:

(a) Mandatory Conversion.

In the event a Qualified Offering is consummated prior to the maturity date of the 2022 Notes, the 2022 Notes automatically convert into shares of Common Stock, immediately upon the occurrence of a Qualified Offering (the “Mandatory Conversion”). The exercise price per share of Common Stock pursuant to the Warrant shall mean, in the case of a Mandatory Conversion, the price of the Common Stock (or unit, if units are offered in the Qualified Offering) in the Qualified Offering.

(b) Voluntary Conversion.

The holders of the 2022 Notes have the right (subject to the conversion limitations set forth therein) from time following the maturity date and prior to a Mandatory Conversion to convert all or any part of the outstanding and unpaid principal and interest then due under the 2022 Notes into fully paid and non-assessable shares of Common Stock (the “Voluntary Conversion”). The exercise price per share of Common Stock pursuant to the Warrant shall mean, in the case of a Voluntary Conversion, the lower of (i) $21.25 per share or (ii) 75% of the average of the VWAP of the Company’s Common Stock during the ten (10) Trading Day period immediately prior to the maturity date.

In connection with the Offering, each of Piezo, and Memory MD, Inc., (the “Company Subsidiaries”) agreed to execute, in favor of the holders of the 2022 Notes, a guarantee to jointly and severally, unconditionally and irrevocably, guarantee to the holders the prompt and complete payment and performance when due of the Company’s obligations pursuant to the SPA.

In connection with the Offering, the Company entered into a security agreement by and among the Company, each of the holders and the Company Subsidiaries, whereby the Company agreed to grant each of the holders a security interest in all of the assets of the Company, to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the 2022 Notes and the Company Subsidiaries’ obligations under the Guarantee.

F-17

Long Term

2021 Notes

In conjunction with the closing of the Merger on October 1, 2021, the Company conducted an initial closing under a private offering (the “Offering”) of 10% convertible promissory notes due and payable on April 1, 2023 (the “2021 Notes”). As part of the Offering, the Company exchanged the 2020 Notes and accrued interest as well as additional notes issued in 2021 with the same terms as the 2020 Notes and their accrued interest amounting to $4,328,407, as well as $1,540,508 of debt assumed in the merger into 2021 Notes. At the merger, the Company also issued a convertible promissory note to an investor in the amount of $2,950,000 with proceeds of $2,850,000 net of an original issuance discount, with the same terms as the 2021 Notes. The balance of the debt discount at December 31, 2021 was $83,364. Each holder of the 2021 Notes, provided that the note is still then outstanding, will be issued, on the earlier of (i) the date, if any, upon which the Company’s common stock is listed for trading on the NASDAQ stock exchange (the “Uplist”), and (ii) the date that is eighteen months from the date of issuance, a warrant to purchase an amount of shares of the Company’s common stock, equal to such holder’s Warrant Share Amount. For purposes of the foregoing, a holder’s “Warrant Share Amount” means (i) if such Warrant is issued in connection with the Uplist, one half of the initial principal balance of such Holder’s Note at issuance divided by the lesser of (A) $34.0, and (B) and the greater of (x) $17.0 and (y) one hundred twenty percent (120%) of the closing price for the Company’s common stock on the trading day prior to the date of the Uplist, and (ii) if such Warrant is issued otherwise than in connection with the Uplist, the initial principal balance of such Holder’s Note, divided by the lesser of (A) $34.0, and (B) and the greater of (x) $17.0 and (y) one hundred twenty percent (120%) of the volume weighted average price (“VWAP”) for the Company’s common stock over the five consecutive trading days immediately preceding the date that is eighteen months from the date of issuance. The 2021 Notes contain mandatory and voluntary conversion features as detailed in the agreement.

During the year ended December 31, 2022, the Company consummated additional closings of the Offering whereby the Company entered into a Securities Purchase Agreement (the “SPA”) with additional investors, pursuant to which the investors purchased from the Company, 2021 Notes in the principal amount of $2,000,000.

As of December 31, 2021, the total amount of 2021 Notes principal outstanding was $9,718,915. As part of the issuance of the 2022 Notes, all of the 2021 Notes and accrued interest, as well as an additional 10% discount, was converted into shares of common stock. The holders of the 2021 Notes, in connection with their original investment, will also be entitled to warrants based on 50% coverage of their original investment amount. These warrants will have a term of four years after issuance and an exercise price of $21.25 per share.

NOTE 10 - DERIVATIVE FINANCIAL INSTRUMENTS

The Company evaluated the terms and conditions of the 2022 Notes (see note 10 above) under the guidance of ASC 815. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted, and all additional convertible debentures and warrants are included in the value of the derivative liabilities. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion options and warrants and shares to be issued were recorded as derivative liabilities on the issuance date and revalued at each reporting period. The Company evaluated the fair value of the derivatives utilizing the “with and without scenario” using options pricing models and Monte Carlo simulation, and a probability weighted value. As of December 31, 2022, the fair value of derivative liabilities in respect of the conversion feature and the warrants were $1,040,000 and $618,607, respectively.

The following are the data and assumptions used in the conversion feature derivative valuations at the respective dates:

	Inception			December 31, 2022
Common stock price	$	25.5		$	8.5
Exercise price	$	28.05-30.6			28.05-30.6
Expected volatility		100.0	%		100.0	%
Risk free rate		2.3-3.0	%		4.5-4.7	%
Expected dividend yield		0	%		0	%
Expected term (years)		0.55-1.25			0.29-0.70
Discount rate		37.7	%		37.7	%
PV factor		0.67-0.84			0.80-0.91

F-18

The following are the data and assumptions used in the warrant derivative valuations at the respective dates:

	Inception			December 31, 2022
Common stock price	$	25.5		$	8.5
Expected volatility		100.0	%		100.0	%
Expected term (years)		6.05			5.5
Risk free rate		3.5	%		4.6	%
Expected dividend yield		0	%		0	%

The following tables summarize the components of the Company’s derivative liabilities as of December 31, 2022 and December 31, 2021:

	Conversion Feature			Warrants			Total
Balance at December 31, 2021	-			-			-
Issuance – June 13, 2022	$	1,610,000		$	1,622,399		$	3,232,399
Movement in fair value		(570,000	)		(1,003,792	)		(1,573,792	)
Balance at December 31, 2022	$	1,040,000		$	618,607		$	1,658,607

NOTE 11 – NOTES PAYABLE

December 28, 2020 Note

On December 28, 2020, the Company entered into a Securities Purchase Agreement (the “December Purchase Agreement”) dated as of December 28, 2020 (the “December 28 Issuance Date”) and issued and sold to an investor a Promissory Note (the “December 28 Note”) in the aggregate principal amount of $300,000. Pursuant to the December Purchase Agreement, in connection with the issuance of the December 28 Note, the Company issued two common stock purchase warrants (separately, “Warrant A” and “Warrant B”, and together, the “December Warrants”) to the investor, allowing the investor to purchase an aggregate of 5,882 shares of the Company’s common stock, with Warrant A being a commitment fee of 2,941 shares of common stock, and Warrant B being fully earned upon issuance as an additional commitment fee of 2,941 shares of common stock, provide that Warrant B is returnable to the Company upon the repayment of the December 28 Note, as an additional incentive for the repayment of the December 28 Note. The net amount received by the Company during the year ended December 31, 2020 was approximately $265,000 after payment of certain fees to the investor or on behalf of the investor. The December 28 Note bears interest commencing on the December 28 Issuance Date at a fixed rate of 12% per annum on any unpaid principal balance, and will be payable, along with the principal amount, on December 28, 2021.

A lump-sum interest payment for one year is due on the December 28 Issuance Date and added to the principal balance and payable on the maturity date of the December 28 Note or upon acceleration or by prepayment or otherwise, notwithstanding the number of days which the principal is outstanding. Principal payments shall be made in 6 installments each in the amount of $56,000 commencing 180 days following the Issue Date (as defined in the Note) and continuing thereafter each 30 days for 5 months. The Company recorded debt discount of $300,000 related to the December 28 Note, which was fully amortized as of December 31, 2021.

On December 28, 2021, the December 28 Note was amended to add $33,600 of interest, and to amend the payment terms to two equal payments of $184,800 due on February 28, 2022 and March 31, 2022. During the year ended December 31, 2022, the Company repaid all of the outstanding principal and interest.

The December Warrants each have an exercise price of $102.00, subject to customary adjustments, and may be exercised at any time until the three-year anniversary of the December Warrants. The December Warrants include a cashless exercise provision as set forth therein.

NOTE 12 – NOTES PAYABLE – RELATED PARTY

As part of the October 1, 2021 merger with Piezo. and BRSF Acquisition Corp., the Company assumed $155,989 of related party loans from entities related to the former executives and directors of the Company. When assumed, these loans did not bear interest and had a maturity date of December 31, 2021. On March 9, 2022, the loans were amended to provide for an interest rate of 9% per annum, and to extend the maturity dates to provide for payments of $53,000 with accrued interest on March 31, 2022 and June 1, 2022, and a payment of $49,000 plus accrued interest on August 1, 2022. On May 6, 2022 the payment terms were further amended to payments of $53,000 with accrued interest on May 31, 2022 and August 1, 2022, and a payment of $49,000 plus accrued interest on October 1, 2022. During the year ended December 31, 2022, the Company repaid $141,016 of the outstanding principal, and the balance at December 31, 2022 was $14,514.

The Company has an outstanding loan from an officer of the Russian subsidiary in the amount of RUB 34,400. Interest and payment terms have not been determined. The USD equivalent at December 31, 2022 was $596.

F-19

NOTE 13 – LEASES

The Company has ~~two~~a ~~leases~~lease that ~~are~~is accounted for under ASC 842. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset result in straight-line rent expense over the lease term. Variable lease expenses, if any, are recorded when incurred.

The Company entered into a lease agreement for office space located in Sarasota, Florida. The term of the lease is for a period of ~~two~~three years commencing on February 1, 2021 and ending on February 1, ~~2023~~2024. The rent is $6,530 per month for year 1, $6,726 per month for year 2 and $6,928 per month for year 3. The Company will account for the lease under ASC 842 whereby the operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date.

The Company has a lease agreement with terms up to 2 years for the lease of office space. The assets and liabilities from operating leases are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Short-term leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

The Company’s operating lease does not provide an implicit rate that can readily be determined. Therefore, we use a discount rate based on our incremental borrowing rate used at the date closest to lease inception.

The Company’s weighted-average remaining lease term relating to its operating ~~leases~~lease is 1.92 years, with a weighted-average discount rate of 10.3200%.

The Company incurred lease expense for its operating lease ~~leases~~ of $8385,~~469~~986 and $078,821 which was included in “General and administrative expenses,” for the year ended December 31, 2022 ~~2021~~ and ~~2020~~2021, respectively.

The following table presents information about the amount and timing of liabilities arising from the Company’s operating lease as of December 31, ~~2021~~2022:

Maturity of operating lease liabilities for the following fiscal years:
2022	$	118,452
2023	$	88,325
2023		88,325
2024		7,378
2024		7,379
Total undiscounted finance lease payments		95,703
Total undiscounted finance lease payments		214,156
Less: Imputed interest		4,615
Less: Imputed interest		18,475
Present value of finance lease liabilities	$	91,088
Present value of finance lease liabilities	$	195,681

At December 31, ~~2021~~2022, the operating lease right of use assets was $6988,~~632~~537. Supplemental balance sheet information related to the lease as of December 31, ~~2021~~2022 was:

Operating lease right-of-use asset	$	~~191~~88,~~702~~537
Lease liability, current portion		~~104~~83,~~592~~710
Lease liability, long-term		917,~~089~~378
Total operating lease liability	$	~~195~~91,~~681~~088

NOTE 14 – STOCKHOLDERS’ ~~DEFICIT~~ EQUITY

Preferred Stock

The Company has authorized 10,000,000 shares of undesignated preferred stock with a $0.001 par value. As of December 31, ~~2021~~2022, no preferred shares have been issued and these shares are considered blank check preferred shares with no terms, limitations, or rights associated with them.

F-19

Common Stock

The Company has authorized ~~200~~750,000,000 shares of common stock with a $0.001 par value per share. The holders of common stock are entitled to one vote for each share of common stock held at the time of vote. As of December 31, ~~2021~~2022, the Company has ~~deemed 50~~1,~~217~~242,~~308~~647 shares outstanding ~~or deemed outstanding~~.

F-20

Shares Issued for Services

On October 15, 2020, the Company granted to a non-executive officer of the Company ~~292~~3,~~174~~437 restricted shares under the Company’s 2018 Equity Incentive Plan. The shares were valued as of the date of the grant at a fair value of $1141.6795 per share or $487,931, which will be amortized over the vesting period. As a result of the merger and contractual terms of the restricted share agreement, all the remaining unvested shares vested and the Company recorded $280,369 in stock-based compensation. The Company issued ~~10,845~~128 shares of common stock and withheld ~~184~~2,~~298~~168 shares in respect of tax withholdings.

The following table summarized the warrant activity for the years ended December 31, ~~2021~~2022 and ~~2020~~2021:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Warrants	Shares			Price		Term		Value
Balance Outstanding, December 31, 2019		502,250		$	0.57		3.98	$	201,125
Balance Outstanding, December 31, 2020		47,448		$	82.45		3.39	$	351,125
Granted		370,~~530,882~~332			116.0215		39.9052		~~150~~304,~~000~~799
Forfeited		-			-		-		-
Exercised		-			-		-		-
Expired		-(8,858	)		-102.00		-1.73		-
Balance Outstanding, December 31, 2020		4,033,132		$	0.97		3.39	$	351,125
Balance Outstanding, December 31, 2021		108,922		$	38.25		6.85	$	304,799
Granted		5246,~~978,000~~024			07.1900		94.5295		~~304,799~~-
Forfeited		-			-		-		-
Exercised		-			-		-		-
Expired		(~~752,942~~554	)		1108.280		10.73		-
Balance Outstanding, December 31, 2021		9,258,191		$	0.45		6.85	$	304,799
Balance Outstanding, December 31, 2022		354,392		$	16.58		5.20	$	-
Exercisable, December 31, 2021		9,258,191		$	0.32		6.85	$	304,799
Exercisable, December 31, 2022		108,368		$	27.25		5.88	$	-

Equity Incentive Plan

As of September 21, 2018, the Company’s board of directors adopted, and stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan has a 10-year term, which terminates on the day prior to the 10th anniversary of its adoption by the Board. Under the 2018 Plan, the Company may grant equity-based incentive awards, including options, restricted stock, and other stock-based awards, to any directors, employees, advisers, and consultants that provide services to the Company. The vesting period, term and exercise price will be determined at the time of the grant. An aggregate of up to 341,~~500,000~~176 of the Company’s common stock are reserved for issuance under the 2018 Plan. As of December 31, ~~2020~~2021, the Company has granted and has 121,~~800,000~~176 options outstanding, as well as ~~333~~3,~~972~~929 shares of restricted common stock issued under the 2018 Plan. On July 15, 2021 the Company’s board of directors increased the number of shares of common stock authorized for grant from 341,~~500,000~~176 to 894,~~000,000~~118.

FOn May 19, 2022, the Board of Directors approved the issuance of options to purchase an aggregate of 12,778 shares of common stock to certain employees of the Company. The options have an exercise price of $26.35 per share with vesting terms of one quarter/half vesting on November 19, 2022 and the remainder monthly ratably through May 19, 2023. The options will expire on May 19, 2032. The aggregate fair value of $271,324 was calculated using the Black-20Scholes pricing model with the following assumptions: (i) expected life of 5 years, (ii) volatility of 115.0%, (iii) risk free rate of 2.80% (iv) dividend rate of zero, (v) stock price of $26.35, and (vi) exercise price of $26.35. The expense will be amortized over the vesting period and a total of $167,799 was recorded since issuance and through December 31, 2022.

On ~~January~~August 3019, ~~2020~~2022, the Board of Directors approved the issuance of options to purchase an aggregate of ~~800~~303,~~000~~390 shares of common stock to ~~Boris~~certain ~~Goldstein~~employees of the Company. The options have an exercise price of $010.7520 per share ~~which~~with ~~will~~varying ~~vest~~vesting ~~ratably~~terms onthrough aAugust ~~quarterly~~10, ~~basis over a two-year period~~2023. The options will expire on ~~January~~August 3019, ~~2029~~2027. ~~The~~ The aggregate fair value of $512,~~757~~346,000 was calculated using the Black-Scholes pricing model with the following assumptions: (i) expected ~~life~~ 10life of 5 years, (ii) volatility of 76100.0%, (iii) risk free rate of 13.5710% (iv) dividend rate of zero, (v) stock price of $010.1220, and (vi) ~~exercise~~ exercise price of $010.7520. The expense will be amortized over the vesting period and a total of $232,~~790~~318,890 was recorded ~~during~~since ~~the~~issuance and ~~year~~through ~~ended~~ December 31, ~~2020~~2022.

On October 1, 2021, the Board of Directors approved the issuance of options to purchase an aggregate of 4,504,214 shares of common stock to an executive and a director. The options have an exercise price of $0.35 per share and vested immediately upon issuance. The options will expire on October 1, 2031. The aggregate fair value of $1,270,188 was calculated using the Black-Scholes pricing model with the following assumptions: (i) expected life 5years, (ii) volatility of 115%, (iii) risk free rate of 0.93% (iv) dividend rate of zero, (v) stock price of $0.35, and (vi) exercise price of $0.35. The expense of 1,270,188 was recorded in full upon issuance.

On October 21, 2021, the Board of Directors approved the issuance of options to purchase an aggregate of 1,218,248 shares of common stock to the CEO. The options have an exercise price of $0.39 per share with vesting terms of 304,562 vesting on April 21, 2022 and the remainder monthly ratably through October 21, 2023. The options will expire on October 21, 2031. The aggregate fair value of $372,384 was calculated using the Black-Scholes pricing model with the following assumptions: (i) expected life of 4.65 years, (ii) volatility of 113.90%, (iii) risk free rate of 1.22% (iv) dividend rate of zero, (v) stock price of $0.39, and (vi) exercise price of $0.39. These options were amended on December 10, 2021 and December 30, 2021 adjusting the exercise price to $0.21 and the vesting schedule to vest equally at the end of each quarter in 2022. The expense will be amortized over the amended vesting period and a total of $36,667 was recorded during the year ended December 31, 2021.

On December 10, 2021, the Board of Directors approved the issuance of options to purchase an aggregate of 2,718,247 shares of common stock to the certain employees of the Company. The options have an exercise price of $0.21 per share with vesting terms of one quarter vesting on June 10, 2022 and the remainder monthly ratably through December 10, 2023. The options will expire on December 11, 2031. The aggregate fair value of $472,975 was calculated using the Black-Scholes pricing model with the following assumptions: (i) expected life of 5 years, (ii) volatility of 116.90%, (iii) risk free rate of 1.26% (iv) dividend rate of zero, (v) stock price of $0.21, and (vi) exercise price of $0.21. These options were amended on December 30, 2021 adjusting the vesting schedule to vest equally at the end of each quarter in 2022. As the share price had increased on the amendment date, the amendment resulted in an increase to the aggregate fair value of $111,166. The increased fair value along with the unamortized portion of the original fair value will be amortized over the amended vesting schedule. A total of $26,574 was recorded during the year ended December 31, 2021.

On November 15, 2021, the Board of Directors approved the issuance of options to purchase an aggregate of 1,448,276 shares of common stock to the directors of the Company. The options have an exercise price of $0.29 per share and vest per days in service as members of the board of directors during the quarter, at the end of the quarter with the final quarterly vesting quarter end of December 31, 2022. The options will expire on December 11, 2031. The aggregate fair value of $341,793 was calculated using the Black-Scholes pricing model with the following assumptions: (i) expected life of 5.04 years, (ii) volatility of 115.8%, (iii) risk free rate of 1.25% (iv) dividend rate of zero, (v) stock price of $0.29, and (vi) exercise price of $0.29. The expense will be amortized over the vesting period and a total of $28,254 was recorded during the year ended December 31, 2021.

The following table summarized the option activity for the years ended December 31, 2021 and 2020:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Options	Shares			Price		Term		Value
Balance Outstanding, December 31, 2019		1,000,000		$	0.75		9.05	$	150,000
Granted		800,00		$	0.75		10.00		120,000
Forfeited		-			-		-		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance Outstanding, December 31, 2020		1,800,000		$	0.75		8.51	$	270,000
Granted		10,030,764			0.30		9.82		196,825
Forfeited		(77,342	)		1.50		9.12
Exercised
Expired
Balance Outstanding, December 31, 2021		11,753,422		$	0.36		9.47	$	196,825
Exercisable, December 31, 2021		6,537,184		$	0.22		9.14	$	-

For future periods, the remaining value of the stock options totaling approximately $1,266,050 will be amortized into the statement of operations consistent with the period for which the services will be rendered.

NOTE 15 – RELATED PARTY TRANSACTIONS

The Company rents office space from a company in which Hassan Kotob, CEO, has an ownership. For the year ended December 31, 2021, the Company incurred rental expense of $39,600 in respect of this office. In addition, the Company during 2021 the Company expensed an amount of $29,700 of rental expense on behalf of 2020. As a result, the total amount of rent expense paid to a related party was $69,300 in 2021.

As of December 31, 2021, the Company had loans payable from related parties amounting to $155,989. The loans bear no interest and are due on December 31, 2021. These loans were amended after the balance sheet date (see Note 19).

F-21

The following table summarized the option activity for the years ended December 31, 2022 and 2021:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Options	Shares			Price		Term		Value
Balance Outstanding, December 31, 2020		21,177		$	63.75		8.51	$	270,000
Granted		118,007		$	25.50		9.82		196,825
Forfeited		(909)			127.50		9.12		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance Outstanding, December 31, 2021		138,275		$	30.60		9.47	$	196,825
Granted		316,168			10.85		4.83		-
Forfeited		(7,003	)		17.85		8.95		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance Outstanding, December 31, 2022		447,440		$	16.93		5.89	$	-

Exercisable, December 31, 2022		439,167		$	16.93		5.89	$	-

For future periods, the remaining value of the stock options totaling approximately $132,543 will be amortized into the statement of operations consistent with the period for which the services will be rendered.

NOTE 15 – RELATED PARTY TRANSACTIONS

The Company rents office space from a company in which Hassan Kotob, CEO, has an ownership. For the years ended December 31, 2022 and 2021, the Company incurred rental expense of $39,600 and $29,700 in respect of this office, respectively. The total amount of rent expense paid to a related party was $69,300.

As of December 31, 2022, the Company had loans payable due to related parties amounting to $15,110. The loans bear no interest and are due on December 31, 2022. (see Note 12).

On November 12, 2021, the Company entered into a Representation Agreement with LOK Corporation International Inc. (“LOK”), a corporation in which Daniel Cloutier, a director, serves as the chief executive officer. Under the Representation Agreement, LOK acts as the worldwide sales manager for our NeuroCap, NeuroEEG and their accessories. LOK is responsible for the evaluation of regional distribution, development, recruitment and training of the distribution network and provide in-country customer support. Fees for the services are 10% of sales occurring through the distribution channels. The contract term is for three years. To date, we have paid LOK approximately $4,750 for training platform development but no other service fees and no commissions.

NOTE 16 – INCOME TAXES

The Company files corporate income tax returns in the United States (federal) California, Florida, and New York. The Company is subject to federal, state and local income tax examinations by tax authorities through inception.

As of December 31, 2021 and 2020, the Company had federal and state net operating loss carry forwards of $16,883,400 and $12,254,418, respectively that may be offset against future taxable income. Of the total amount of available losses 5,239,877 can be used to offset 100% of future income and will begin to expire in 2031 through 2037. The remaining losses have an infinite carry forward but can only reduce future taxable income a maximum of 80% annually. Due to various business combination and transactions some or all the net operating losses maybe limited by operation of Internal Revenue Code Section 382.F-22

As of December 31, 2022 and 2021, the Company had federal and state net operating loss carry forwards of $30,738,510 and $25,729,952, respectively that may be offset against future taxable income. Of the total amount of available losses 5,239,877 can be used to offset 100% of future income and will begin to expire in 2031 through 2037. The remaining losses have an infinite carry forward but can only reduce future taxable income a maximum of 80% annually. The Company has done an analysis of Internal Revenue Code (IRC) Section 382 ownership changes and determined that the Merger in 2021 created a limitation event. Of the total outstanding NOL carry-forwards $20,792,747 is subject to an annual IRC Sec 382 limitation of $251,691.

The tax effects of temporary differences which give rise to deferred tax assets (liabilities) are summarized as follows:

	For the Years Ended December 31,
	2021			2020
	2022			2021
Net operating loss carry forwards	$	47,~~181~~331,~~841~~884		$	24,~~252~~181,~~985~~841
Share-based compensation		~~806~~1,~~997~~633,894			90806,~~110~~997
Accrued expenses		~~301~~795,~~422~~859			19301,~~009~~422
Intangible assets		~~100~~107,~~736~~222			~~107~~100,~~187~~736
Fixed assets		(2928,~~877~~768	)		(2329,~~039~~877	)
Valuation allowance		(5,361,119	)		(2,446,252	)
Research and development		64,579			-
Valuation allowance		(9,904,670	)		(5,361,119	)
Net Deferred Tax Asset	$	-		$	-

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.

Reconciliation of the statutory federal income tax to the Company's effective tax:

	For the Years Ended
	December 31,
	2021			2020
	2022			2021
Statutory federal tax rate		21.0	%		21.0	%
State tax expense		4.75	%		4.37	%
Acquired deferred tax assets		70.80	%		-7.8	%
PPP loan forgiveness		0.30	%		-0.3	%
Change in tax rate		(01.92	)%		-(0.9	)%
Amortization		(02.49	)%		-(0.4	)%
Other permanent items		(0.<

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