UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025

☐ 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: 001-41507

NEXALIN TECHNOLOGY, INC.

(Exact name of Registrant as specified in its charter)

Delaware		27-5566468
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1776 Yorktown, Suite 550 Houston, TX		77056
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (832) 260-0222

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	NXL	The Nasdaq Capital Market
Warrants, exercisable for one share of Common Stock	NXLIW	The Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Securities Exchange Act: NONE

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 15 (d) of the Securities Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ~~accountant~~accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~Yes~~ ☐ ~~No ☒~~

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. ~~Yes~~ ☐ ~~No ☒~~

Indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ~~Yes~~ ☐ ~~No ☒~~

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to Section 240.10D-1(b). ~~Yes~~ ☐ ~~No ☒~~

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

As of June 30, ~~2024~~2025, the aggregate market value of the registrant’s common stock held by non-affiliates of registrant was $1014,~~228~~732,~~303~~207 based upon the closing sale price of the common stock as reported by The Nasdaq Capital Market. Solely for purposes of this calculation, all executive officers and directors of the registrant are considered affiliates.

As of March 12 23, ~~2025~~2026 there were 1320,~~303~~581,~~523~~646 shares of the Registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, Ietc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (ec) under the Securities Act of 1933.

None.

TABLE OF CONTENTS

		Page
SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		ii
RISK FACTORS SUMMARY		iii
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	5245
Item 1C.	Cybersecurity	5245
Item 2.	Properties	5346
Item 3.	Legal Proceedings	5346
Item 4.	Mine Safety Disclosure	5346
PART II
Item 5.	Market For the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	5447
Item 6.	[Reserved]	5548
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5649
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	6456
Item 8.	Financial Statements and Supplemental Data	6456
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	6556
Item 9A.	Controls and Procedures	6556
Item 9B.	Other Information	6657
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	6657
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	6758
Item 11.	Executive Compensation	7463
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7867
Item 13.	Certain Relationships and Related Transactions, and Director Independence	8369
Item 14.	Principal Accountant Fees and Services	8571
PART IV
Item 15.	Exhibits and Financial Statement Schedules	8773
Item 16.	Form 10-K Summary	8875
Signatures		76

SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

~~Certain~~This ~~information~~Annual ~~included~~Report oron ~~incorporated~~Form by10-K ~~reference~~(“Report”) inof ~~this~~Nexalin ~~document~~Technology, ~~may~~Inc. ~~not~~and ~~address~~its ~~historical~~subsidiaries ~~facts~~(the ~~and~~“Company,” ~~therefore~~“Nexalin,” ~~could~~“we,” be“us” ~~interpreted~~and to“our”) becontains “forward-looking statements” as that ~~term~~are isbased ~~defined~~on inmanagement’s ~~the~~belief ~~Private~~and ~~Securities~~assumptions ~~Litigation~~on ~~Reform~~information ~~Act~~currently ofavailable ~~1995~~to ~~and other federal securities laws~~management. All statements other than statements of historical fact are ~~statements that could be deemed~~ forward-looking statements, including projections of financial performance; statements of plans, strategies and objectives of management for future operations; any statement concerning developments, performance or industry rankings relating to products or services; any statements regarding future economic conditions or performance; any statements of assumptions underlying any of the foregoing; and any other statements that address activities, events or developments that Nexalin ~~Technology, Inc. and its subsidiaries (“Nexalin” or the “Company” and also referred to as “we,” “us” and “our”)~~ intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements may be characterized by terminology such as “believe,” “continue,” “anticipate,” “aim,” “expect,” “could,” “should,” “may,” “might,” “objective,” “intend,” “plan,” “will,” “estimates,” “projects,” “strategy” and similar expressions. These statements are based on assumptions and assessments made by the Company’s management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. Any such forward-looking statements are not guarantees of future performance (financial or operating), and actual results, developments and business decisions may differ materially from those envisioned by such forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties that include but are not limited to the following:

●

our plans to develop and commercialize our products;

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our planned clinical trials for our products;

●

the timing of the availability of data from our clinical trials;

● ~~our ability to take advantage of benefits offered by current and pending legislation related to~~ the ~~development of products addressing antimicrobial resistance; ● the~~ timing of our planned regulatory filings;

●

the timing of and our ability to obtain and maintain regulatory approvals for our products;

● the clinical utility of our products and their potential advantages compared to other treatments and/or devices;

●

our commercialization, marketing and distribution capabilities and strategy;

●

our ability to establish and maintain arrangements for the manufacture of our products;

●

our ability to establish and maintain collaborations and to recognize the potential benefits of such collaborations;

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our estimates regarding the market opportunities for our products;

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our ability to remediate material weaknesses in our internal controls over financial reporting;

●

our intellectual property position and the duration of our patent rights;

●

our estimates regarding future expenses, capital requirements and needs for additional financing; and

~~the~~● other ~~risk~~risks ~~factors~~and uncertainties, including those set forth under Part I, Item 1A, “Risk Factors”, in this Annual Report on Form 10-K and in our other SEC filings. The forward-looking statements included herein apply only as of the date of this Annual Report on Form 10-K. The Company disclaims any duty to update such forward-looking statements, all of which are expressly qualified by the foregoing, except as may be required by law.

These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties, and other factors, including unpredictable or unanticipated factors that we have not discussed in this Report. We urge you to refer to the “Risk Factors” section of this Report for a discussion of other important factors, many of which are outside of our control, that may cause actual results to differ materially from those expressed or implied by the 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 the forward-looking statements prove to be inaccurate, the inaccuracy may be material. Considering 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. The forward-looking statements in this Report represent our views as of the date of this Report. We anticipate that subsequent events and developments will cause our views to change; however, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by U.S. federal securities laws. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Report.

RISK FACTORS SUMMARY

The following is a summary of the principal risks that could materially adversely affect our business, results of operations and financial condition, all of which are more fully described in Item 1A, “Risk Factors.” This summary should be read in conjunction with the “Risk Factors” section contained herein and should not be relied upon as an exhaustive summary of the material risks facing our business, as it does not address all of the risks that we face.

Risks Related to Our Financial Position and Capital Needs

●

We expect to continue to incur significant expenses and operating losses over the next several years and may never achieve or maintain profitability.

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Our independent auditor’s report states there is substantial doubt about our ability to continue as a going concern, which is highly dependent upon executing our business plan and obtaining additional financing.

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We have a limited operating history and have had only limited sales of our products and services to date, which may make it difficult to evaluate our business prospects and future performance.

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We will need to raise substantial additional capital to fund our operations, including to continue preclinical and clinical development, pursue regulatory approvals, and to commercialize our products, which may not be available on acceptable terms, or at all.

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Future capital raises through equity offerings will dilute existing stockholders’ ownership interests, and debt financing may involve restrictive covenants limiting our ability to take specific actions.

Risks Related to Development of Our Products and Preclinical Program

●

We depend on the success of our Gen-2 SYNC and Gen-3 HALO devices, which are currently in clinical development but have not completed advanced clinical trials. If we fail to obtain regulatory approval for these products or experience significant delays, we may never become profitable.

●

Success in preclinical studies or early clinical trials does not ensure that later clinical trials will generate the same results.

●

We may experience delays or difficulties enrolling patients in clinical trials, which could delay or prevent receipt of necessary regulatory approvals.

Risks Related to Our Dependence on Third Parties

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We rely on third parties, including research institutions and our joint venture partner Wider in China, to conduct clinical trials for our products and these third parties may not perform satisfactorily, meet deadlines, or comply with applicable regulatory requirements.

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We rely on collaborations with third parties for quality assurance, manufacturing, and other activities. If we fail to maintain these relationships, we may need to perform these activities at our sole expense or may not find other collaborators on acceptable terms.

iii

Risks Related to the Commercialization of Our Products

●

Even if our products receive marketing approval, they may fail to achieve market acceptance by healthcare providers, physicians, patients, and third-party payors necessary for commercial success.

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Coverage and adequate reimbursement may not be available for our products from third-party payors, including government health administration authorities and private health insurers, which may negatively impact the demand for, or the price of, our products.

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We face competition from other companies, many of which have greater financial and human resources than we have, more established sales, marketing and distribution capabilities, and more experience in research and development.

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Product liability lawsuits against us could cause us to incur substantial liabilities and limit commercialization of our products.

Risks Related to Our Business and Managing Our Growth

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Our future success depends on our ability to retain key executives and attract, retain and motivate qualified scientific, clinical, commercialization, and sales and marketing personnel, the loss of one or a combination of key employees could impede our research, development and commercialization objectives.

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As clinical development progresses, we expect significant growth in employees and the scope of our operations, which we may not be able to effectively manage.

Risks Related to Doing Business in China

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Our Joint Venture in China is subject to certain regulatory, political, economic, and legal risks.

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The PRC legal system is based on written statutes with limited precedential value from court decisions. Interpretation and enforcement of laws and regulations involve uncertainties, and it may be difficult to enforce our contractual or intellectual property rights in China.

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Recent changes in U.S. trade policy, including tariffs and trade restrictions on goods from China, could increase our manufacturing costs and make our products less competitive. China has retaliated with tariffs on U.S. goods, which may further disrupt our supply chain.

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We may be subject to PRC laws relating to data security, cybersecurity reviews, and restrictions over foreign investments. The Joint Venture may be subject to regulatory inspection, review, or enforcement actions by Chinese authorities.

Risks Related to Our Intellectual Property

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We may be unable to obtain or maintain adequate patent protection for our technologies and products.

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We may become involved in expensive and time-consuming lawsuits to protect or enforce our patents, trademarks, copyrights or other intellectual property.

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Third parties may assert intellectual property claims against us.

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We rely on trade secrets and unpatented know-how to maintain our competitive position. Despite confidentiality agreements, parties may breach these agreements and disclose our proprietary information, and competitors may independently develop equivalent know-how.

Risks Related to Regulatory Approval of Our Products and Other Legal Compliance Matters

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The regulatory approval process with the FDA and foreign regulatory agencies is expensive, time-consuming and uncertain.

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Failure to obtain marketing approval in foreign jurisdictions would prevent our products from being marketed in those territories.

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Even if we obtain marketing approval, approved products are subject to ongoing review and extensive regulation, including post-marketing studies, surveillance, and compliance with advertising and promotion requirements.

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Our business activities may be subject to the U.S. Foreign Corrupt Practices Act (FCPA), anti-bribery laws, export controls, trade sanctions and import regulations, violations could result in fines, criminal sanctions, and prohibitions on offering our products in certain countries.

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We may be subject to healthcare fraud and abuse laws, including the federal Anti-Kickback Statute and the federal False Claims Act, which could constrain our business arrangements and expose us to civil, criminal and administrative penalties.

Risks Related to Ownership of Our Common Stock and Our Status as a Public Company

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The trading price of our common stock has been and is likely to continue to be volatile.

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On January 21, 2026, we received notice that we are not in compliance with the Nasdaq minimum bid price requirement of $1.00 per share. If we fail to regain compliance by July 20, 2026, or any extended deadline, our common stock could be delisted.

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Provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, and Section 203 of the Delaware General Corporation Law, could discourage, delay or prevent a merger, acquisition or other change in control of our company.

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As an emerging growth company and smaller reporting company, we rely on exemptions from certain disclosure requirements, which may make our common stock less attractive to investors and result in a less active trading market and more volatile stock price.

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We have identified material weaknesses in our internal controls over financial reporting, including insufficient segregation of duties due to limited accounting personnel and insufficient IT controls, which if not remediated, these weaknesses could result in material misstatements of our financial statements.

PART I

Item 1. Business

Overview

Nexalin is headquartered, and maintains its base of management and operations, in Houston, Texas. We design and develop innovative neurostimulation products to uniquely and effectively help combat the ongoing global mental health epidemic. We developed an easy-to-administer medical device — referred to as “Generation 1” or “Gen-1” — that utilizes bioelectronic medical technology to treat anxiety, insomnia and depression without the need for drugs or psychotherapy. Our original Gen-1 devices are cranial electrotherapy stimulation (CES) devices that emit a waveform at 4 milliamps during treatment and are presently classified by the U.S. Food and Drug Administration (the “FDA”) as a Class II device.

Medical professionals in the United States have utilized the Gen-1 device to administer treatment to patients in clinical settings. While the Gen-1 device had been cleared by the FDA to treat depression, anxiety, and insomnia, three prevalent and serious diseases, because of the FDA’s December 2019 reclassification of CES devices, the Gen-1 device was reclassified as a Class II device for the treatment of anxiety and insomnia. We are required to file a new application under Section 510(k) of the Federal Food, Drug and Cosmetic Act (“510(k) Application”) to be approved by the FDA for the sales and marketing of our devices for the treatment of anxiety and insomnia. In the FDA’s December 2019 reclassification ruling, the treatment of depression with our device will require a Class III certification and require a new PMA (premarket approval) and/or a new De Novo application to demonstrate safety and effectiveness.

While we continue providing services to medical professionals to support patients’ use of the Gen-1 devices which were in operation prior to December 2019, we are not making new sales or new marketing efforts of Gen-1 devices in the United States. We continue to derive revenue from devices which we sold or leased prior to the FDA’s December 2019 reclassification announcement. This revenue consists of monthly licensing fees and payments for the sale of electrodes and patient cables. We have paused marketing efforts for new sales of our Gen-1 device for treatment of anxiety and insomnia in the United States.

The waveform that comprises the basis of our “Generation 2”, or“Gen-2”, “Gen-2 SYNC” or “SYNC” and new “Generation 3”, or“Gen-3”, “Gen-3 HALO” or “HALO” headset devices isare in Q-submission process for review by the FDA. This process allows Nexalin to get clear, specific, written feedback from the FDA on indications, device classification and clarity on the regulatory pathway and improves the efficiency and predictability of the regulatory pathway. Determinations of the safety and efficacy of our devices in the United States are solely within the authority of the FDA. We plan to conduct clinical trials for the ~~Gen-3~~HALO ~~device~~and SYNC devices in the U.S. and we continue to consult with the FDA as part of the pre-submission process. If and when we obtain FDA clearance for the ~~Gen-3~~HALO ~~device~~and SYNC devices, we intend to extend the development and commercialization of our devices for sale in the U.S. and other territories, given the potential unmet demand for the treatment of mental health conditions.

Our Technology

~~We have designed and developed a new advanced waveform technology to be emitted at 15 milliamps through new and improved medical devices referred to as~~ Gen-2 ~~and~~SYNC Gen-3. Gen-2 is a clinical use device with a modern enclosure emitting the new 15 milliamp advanced waveform. Gen-3 is a new patient headset that is intended to be prescribed by licensed medical professionals in a virtual clinic setting similar to existing tele-health platforms. The Nexalin research team believes that the new 15 milliamp Gen-2 and Gen-3 devices can penetrate deeper into the brain and stimulate associated structures that contribute to or cause mental illness, which we believe will generate enhanced patient response without any risk or unpleasant side effects. The Nexalin regulatory team has made a strategic decision to develop strategies for pilot trials and/or pivotal trials in various mental health disease states. In addition, a new PMA application in the United States is in strategic development for the treatment of depression utilizing both Gen-2 and Gen-3. We plan to develop a strategic schedule to execute additional pilot trials and/or pivotal trials for the new Gen-3 device for anxiety and insomnia in the United States, Brazil and China beginning in the first quarter of 2025. Preliminary data provided by The University of California, San Diego and recent published data from Asia supports the safety of utilizing our 15 milliamp waveform technology. However, the determination of safety and efficacy of medical devices in the United States is subject to clearance by the FDA.HALO:

Beginning in 2019, Nexalin engineers began the testing and design of a new 15 milliamp waveform that became the basis of our new Gen-2 or SYNC and Gen-3 or HALO medical devices. Today, the Gen-2 is branded under a new trademark name known as “SYNC”, the Gen-3 is branded under a new trademark name known as “HALO”.

We plan to conduct clinical trials for the Gen-2 SYNC and Gen-3 HALO devices in the U.S. and we will continue to consult with the FDA as part of the pre-submission process.

~~Currently,~~All ~~the~~determinations ~~waveform that comprises the basis~~ of ~~Gen-2 and new Gen-3 headset devices has been tested in research settings to develop safety data that has been submitted for review by~~ the ~~FDA for~~ safety ~~evaluation~~ and ~~eventual marketing in the United States and around the world. Determinations of the safety and~~ efficacy of our devices in the United States are solely within the ~~authority~~purview of the FDA.

ANexalin’s new ~~pre-submission~~advanced ~~document~~waveform intechnology ~~preparation~~will ofbe aemitted at 15 milliamps through our new ~~510(k)~~and improved medical devices referred to as Gen-2 SYNC and~~/or~~ DeGen-3 ~~Novo~~HALO. ~~application~~The ~~for~~new ~~our~~Gen-2 SYNC is a clinical use device with a modern enclosure emitting the new 15 milliamp advanced waveform. The Gen-3 HALO is a new patient headset atthat is intended to be prescribed by licensed medical professionals in a virtual clinic setting similar to existing tele-health platforms. The Nexalin research team believes that the new 15 ~~milliamps~~milliamp ~~was~~Gen-2 ~~filed~~SYNC ~~with~~and Gen-3 HALO devices can penetrate deeper into the ~~FDA~~brain inand ~~January~~stimulate ofdeep ~~2023~~brain structures that contribute to or cause mental illness, which we believe will generate enhanced patient response without any risk or unpleasant side effects. ~~Formal~~The ~~comments~~Nexalin regulatory team is developing strategies for pilot trials and/or pivotal trials for various mental health disease states. In addition, we continue to ~~our~~review ~~pre-submission~~internally ~~document~~for ~~filing~~a ~~were~~strategy ~~received~~for a new PMA application in ~~March~~the United States for the treatment of ~~2023.~~depression Autilizing ~~formal~~both ~~meeting~~Gen-2 SYNC and Gen-3 HALO. We plan to ~~address~~execute ~~FDA~~additional ~~comments~~pilot ~~took~~trials ~~place~~and/or onpivotal ~~May 9~~trials for the new Gen-3 HALO device for anxiety and insomnia in the United States, ~~2023~~Brazil and China throughout 2026.

The University of California, San Diego (“UCSD”) conducted a clinical study evaluating Nexalin’s Gen-2 SYNC device, which provided positive results in reducing pain in veteran patients with Mild Traumatic Brain Injury (mTBI). Preliminary data provided by UCSD and recent published data from Asia supports the safety of utilizing our 15 milliamp waveform technology. However, the determination of safety and efficacy of medical devices in the United States is subject to clearance by the FDA.

Currently, the waveform that comprises the basis of Gen-2 and new Gen-3 headset devices has been tested in research settings to develop safety data that has been submitted for review by the FDA for safety evaluation and eventual marketing in the United States and around the world. Determinations of the safety and efficacy of our devices in the United States are solely within the purview of the FDA.

In October 2025, the FDA formally accepted our Q-Submission (“Q-Sub”) related to the Company’s Gen-2 Console (“SYNC”) system for the treatment of Alzheimer’s disease and dementia. The Company met with the FDA in November 2025 and continues to have discussions to develop a strategy and protocol. The acceptance of the Company’s request for interaction with the FDA with respect to its Gen-2 SYNC system represents a significant step toward Nexalin’s goal of achieving FDA authorization to begin U.S. clinical studies targeting Alzheimer’s and dementia — two of the most urgent unmet needs in healthcare. The Q-Submission process enables structured dialogue with and feedback from the FDA to discuss proposed clinical trial design, study endpoints, and regulatory pathway for evaluating the Gen-2 SYNC system as a potential non-invasive therapy for these debilitating neurodegenerative conditions, as well as for mild to moderate cognitive impairment (MCI) associated with Alzheimer’s disease.

A new pre-submission document in preparation of a new 510(k) and/or De Novo application for our Gen-3 HALO headset at 15 milliamps was filed with the FDA in January of 2023. Formal comments to our pre-submission document filing were received in March 2023. A formal meeting to address FDA comments took place on May 9, 2023. Minutes of the meeting with the FDA were filed with the FDA on May 16, 2023.

A second FDA pre-submission document was submitted on February 13, 2024. FDA comments to this second pre-submission document were received on April 26, 2024. A formal teleconference was held with the FDA on April 26, 2024. The Nexalin regulatory team and the FDA came to a consensus on the Insomnia Clinical research protocols for insomnia assessment scales and timeline end points and patient population size.

~~The~~In ~~Nexalin~~February 2026, ~~regulatory~~the ~~team~~Company ~~plans~~entered tointo ~~use~~a ~~data~~short-term ~~from~~start-up ~~these~~agreement with Lindus Health Limited to support limited clinical ~~trials~~trial ~~will~~preparation ~~also~~activities bewhile ~~used~~a tobroader ~~support~~services anagreement ~~application~~is ~~for~~under ~~the~~negotiation. ~~CE-mark~~The ofagreement ~~our~~is ~~Gen-2~~limited in scope and ~~new~~duration, ~~Gen-3~~and ~~headset~~no ~~devices~~patients inmay ~~the~~be ~~European~~enrolled ~~Union~~or clinical data collected unless a definitive agreement is executed.

The global rise in mental health and cognitive disorders is causing widespread suffering and hardship. These conditions have far-reaching consequences for individuals, families, and communities. Our focus is on the continued development of our innovative bioelectronic medical technologies and rapid regulatory approval. We intend to help reverse these losses, and hardships of these losses, by safely and effectively treating various mental health disorders associated with post Covid and long Covid mental disease states.

All our products are non-invasive, undetectable to the human body and are designed to provide relief to those afflicted with mental health issues without adverse side effects. We have a proprietary design that stabilizes currents, electromagnetic fields, and various frequencies — referred to collectively as a waveform - particularly our proprietary, 15 milliamp patented waveform. Additionally, our devices generate a proprietary high frequency carrier wave for deeper penetration into the brain. It is applied to the brain with electrodes on the forehead and behind each ear at the mastoid. The features of this proprietary waveform and the electrodes allow the application of the waveform to the entire brain rather than a small, targeted area of the brain. To ensure deeper penetration into the brain, we have created a waveform that is undetectable to the brain which allows the increase of the power from < 4 mAmps to 15 mAmps, more than a 400% increase without incurring any patient discomfort, risk, or adverse side effects. By increasing the power, our waveform can penetrate deeper into the brain and stimulate deep mid-brain structures associated with mental illness. Our research data and clinical teams believe that a more powerful waveform will create a stronger response in the brain. A stronger response creates a higher level of efficacy. This entire proprietary technique allows Nexalin to provide a non-invasive and comfortable treatment, which we believe is more powerful than any FDA-cleared stimulation device in the market. The waveform that comprises the basis of Gen-2 and new Gen-3 headset devices has been tested in research settings to develop safety data that has been submitted for review by the FDA for safety evaluation and eventual marketing in the United States and around the world. Current pilot study protocols and randomized clinical trials have been designed and submitted to the FDA to provide feedback on final reports and data sets for the purpose of safety and efficacy evaluations in the future. Determinations of the safety and efficacy of our devices are solely within the authority of the FDA.

Beyond the well-known safety, efficacy, and side-effect concerns surrounding conventional mental health treatments such as Electro-Convulsive Therapy (ECT), drugs, and psychotherapy, the stigma associated with mental illness continues to hinder individuals from seeking the help they need. We have received industry reports and feedback that many patients that struggle with mood disorders have the stigma of embarrassment associated with psychiatrists and psychotherapy (e.g., counselling with a therapist). Additional stigmas and other issues are associated with the side effects of medication prescribed by psychiatrists. When we researched the current pharmaceuticals model, public information highlighted the many side effects associated with such medications. Frequently, patients would stop taking the medication because of the uncomfortable side effects. Additional public information mentions dependency and withdrawal issues associated with medication for psychiatric disorders.

ToAll ~~address~~our ~~the~~products ~~embarrassment~~are ~~stigma~~non-invasive, wesafe ~~are~~and ~~developing~~undetectable ato ~~new~~the ~~virtual~~human ~~clinic~~body ~~that~~and ~~will~~can ~~allow~~provide ~~the~~relief ~~physician~~ to ~~diagnose~~those aafflicted with mental health ~~issue~~issues inwithout ~~the~~adverse ~~privacy~~side ofeffects. We have a ~~tele-psychiatry~~proprietary ~~virtual~~and ~~platform.~~protected ~~After~~design ~~diagnosis,~~that ~~the~~stabilizes ~~physician~~currents, ~~will~~electromagnetic ~~prescribe~~fields, ~~the~~and ~~Nexalin~~various ~~Gen-3~~frequencies ~~headset~~— referred to ~~the~~collectively ~~patient~~as ~~for~~a ~~treatment.~~waveform ~~Next~~— particularly our proprietary, ~~the~~15 ~~Gen-3~~milliamp ~~device~~patented ~~will~~waveform. beAdditionally, ~~shipped~~our todevices ~~the~~generate ~~patient’s~~a ~~home.~~high ~~After~~frequency ~~the~~carrier ~~patient~~wave ~~receives~~for deeper penetration into the ~~device,~~brain. ~~they~~It ~~will~~is ~~pair~~applied to the ~~headset~~brain ~~device~~ with an ~~app~~array inof electrodes on the ~~patient’s~~forehead ~~smart~~and ~~phone~~behind each ear at the mastoid. The ~~app~~features ~~will~~of ~~communicate~~this ~~with~~proprietary ~~the~~waveform ~~Nexalin~~and ~~cloud~~the ~~servers~~array toof ~~authorize~~electrodes allow the ~~device~~application ~~for~~of ~~treatment~~the ~~according~~waveform to the ~~protocol~~entire ~~designed~~brain byrather than a small, targeted area of the ~~physician~~brain. ~~The~~To ~~physician~~ensure ~~will~~deeper ~~monitor~~penetration ~~treatment~~into ~~compliance~~the ~~and~~brain, ~~other~~our ~~health~~new ~~related~~advanced ~~issues~~waveform inis undetectable which allows the increased power from < 4 mAmps to 15 mAmps, more than a ~~private~~400% ~~physician~~increase ~~dashboard~~without ~~that~~incurring ~~connects~~any ~~through~~patient discomfort, risk, or adverse side effects. By increasing the ~~Nexalin~~power, ~~app~~our waveform can penetrate deeper into the brain and ~~cloud~~stimulate ~~servers~~deep mid-brain structures associated with mental illness. WeOur research and clinical teams believe that toa ~~preserve~~more ~~product~~powerful ~~safety~~waveform ~~and~~will ~~integrity~~create ~~for~~a ~~home~~stronger ~~use,~~response in the ~~headset~~brain. ~~device~~A ~~will~~stronger ~~require~~response ~~physician~~creates ~~oversight~~a ~~that~~higher ~~will~~level ~~include~~of efficacy. This entire proprietary technique allows Nexalin to provide a ~~prescription~~non-invasive ~~for~~frequency ~~use~~based ~~with~~waveform that provides a ~~monthly~~comfortable ~~authorization~~treatment, ~~provided~~that byis undetectable to the ~~physician~~patient ~~after~~and ais ~~monthly~~more ~~virtual~~powerful ~~visit~~than other stimulation devices on the market. ~~All~~Current ~~appointments~~pilot ~~will~~study beprotocols inand arandomized ~~virtual~~clinical ~~setting~~trials tohave ~~provide~~been ~~privacy~~designed and ~~convenience~~submitted ~~for~~to the ~~physician~~FDA ~~and~~to ~~patient.~~provide ~~The~~feedback ~~Nexalin~~on ~~virtual~~final ~~clinic~~reports ~~will~~and bedata ~~provided~~sets infor athe ~~proprietary~~purpose ~~virtual~~of ~~platform~~safety ~~currently~~and efficacy evaluations in the ~~design stage~~future.

~~Our~~Strategic ~~China~~plans ~~Gen-2~~are ~~15 milliamp device was approved~~ in ~~China~~development byto ~~the~~use ~~China National Medical Products Administration (~~the ~~“NMPA”)~~data ~~for~~from ~~the~~these ~~treatment of insomnia and depression in China. This device and all other~~ clinical ~~devices~~trials ~~will~~to ~~include~~support ~~single~~an ~~use~~application ~~electrodes~~ for ~~long term revenue streams. The USA Gen-2 device bears a fresh and modern appearance that meets~~ the ~~technology standards of the digital tech world of 2025. Early adopters of the Gen~~CE-1mark device will be able to access additional firmware upgrades which are planned to enhance the previously purchased devices to the new symmetric15-milliamp waveform. Our Gen-2 device will be equipped with Radio Frequency Identification (RFID) technology that exchanges electrode usage data with a reader in the main device. The purpose of ~~RFID~~our isSYNC toclinical ~~track~~ and ~~maintain~~HALO ~~control~~headset ofdevices the proprietary single use electrode. Our electrode chip will be programmed to exchange data with the device and allow activation for a single treatment with a new electrode only. This ensures a recurring revenue stream on the device and protects against any generic knockoffs designed to avoid treatment costs. This upgrade in ~~technology also ensures~~ the ~~proprietary~~European ~~nature of the electrodes that support treatment outcomes are sustained~~Union.

The global rise in mental health and cognitive disorders is causing widespread suffering and hardship. These conditions have far-reaching consequences for individuals, families, and communities. Our focus is on the continued development of our innovative bioelectronic medical technologies and regulatory approval. Our intention is to help reverse these losses, and the hardships of these losses, by safely and effectively treating various mental health disorders associated with post Covid and long Covid mental disease states.

To address the embarrassment stigma, we are developing a new virtual clinic that will allow the physician to diagnose a mental health issue in the privacy of a tele-psychiatry virtual platform. After diagnosis, the physician can prescribe the Nexalin Gen-3 HALO headset to the patient for treatment. Next, the HALO device will be shipped to the patient’s home. After the patient receives the device, they will pair the headset device with an app in the patient’s smart phone. The app will communicate with the Nexalin cloud servers to authorize the device for treatment according to the protocol designed by the physician. The physician will monitor treatment compliance and other health related issues in a private physician dashboard that connects through the Nexalin app and cloud servers. We believe that to preserve product safety and integrity for home use, the headset device will require physician oversight that will include a prescription for use with a monthly authorization provided by the physician after a monthly virtual visit. All appointments will be in a virtual setting to provide privacy and convenience for the physician and patient. The Nexalin virtual clinic will be provided in a proprietary virtual platform currently in the design stage.

In February 2026, the Company entered into a non-binding memorandum of understanding with GreenLight Venture LLC to evaluate a potential strategic collaboration. The memorandum of understanding is preliminary in nature and does not create any binding obligations. There can be no assurance that the discussions will result in a definitive agreement or transaction.

Our original China Gen-2 15 milliamp device was approved in China by the China National Medical Products Administration (the “NMPA”) for the treatment of insomnia and depression in China. This device and all other clinical devices will include single use electrodes for long term revenue streams. The USA Gen-2 SYNC device bears a fresh and modern appearance that meets the current technology standards of the digital tech world. Early adopters of the Gen-1 device will be able to access additional firmware upgrades which are planned to enhance the previously purchased and leased devices to the new symmetric 15-milliamp waveform. Our Gen-2 SYNC device will be equipped with Radio Frequency Identification (RFID) technology that exchanges electrode usage data with a reader in the main device. The purpose of RFID is to track and maintain control of the proprietary single use electrode. Our electrode chip will be programmed to exchange data with the device and allow activation for a single treatment with a new electrode only. This ensures a recurring revenue stream on the device and protects against any generic knockoffs designed to avoid treatment costs. This upgrade in technology also ensures the proprietary nature of the electrodes that support treatment outcomes.

Overall, we believe that our advanced waveform, technological upgrades and the development of a modern headset monitored with our IT management platform will position us with the opportunity to disrupt the traditional mental health treatment model. Our mission is to remove the stigma of expensive psychotherapy or pharmaceuticals with the attendant side effects and dependency issues and replace such stigma with clinically proven and cost-effective technology that is easily accessible in the privacy of the patient’s home and monitored by licensed healthcare providers.

Historically, significant aspects of our ongoing clinical trials were conducted in Asia with Wider Come Limited (“Wider”).

Military & Government

Oman

The Sultanate of Oman’s Ministry of Health has granted the approval for use of our Gen-2 device.

Brazil

On June 13, 2024, the Company announced that our Gen-2 device had been granted regulatory approval by the Brazilian Health Regulatory Agency, a regulatory body of the Brazilian government responsible for approving new drugs and medical devices.

Formalized Joint Venture; China Related Activities

On May 31, 2023, the Company formalized an agreement related to the formation of a joint venture (the “Joint Venture”) established to engage in the clinical development, marketing, sale and distribution of Nexalin’s ~~second generation transcranial Alternating Current Stimulation (“tACS”) devices (“~~Gen-2 devices”) in China and other countries in the region. The Joint Venture is registered in Hong Kong.

~~The~~Through December 31, 2025, the Company has no employees or office in China and none of the Company’s operations are conducted in China. The Joint Venture does not maintain any variable interest entity structure or operate any data center in China.

Under the Joint Venture Agreement, Wider Come Limited (“Wider”), a related party, is obligated to fund all operations for the initial 12-month period of the Joint Venture, after which Nexalin and Wider plan to jointly fund the Joint Venture’s operating expenses in accordance with their pro rata ownership.

The Joint Venture is controlled by a Board of Directors in which Wider is to have sole representation but neither the Company nor Wider has exclusive decision-making ability over day-to-day or significant operational decisions. Wider and Nexalin own 52% and 48% of the Joint Venture, respectively. In accordance with ASC 323 Investments - Equity Method and Joint Ventures (“ASC 323”) and ASC 810 - Consolidations (“ASC 810”), the Company recognized $4,851 and $0 for the years ended December 31, 2024 and 2023, respectively, on the consolidated statements of operations and comprehensive loss.

As of the date of this Annual Report on Form 10-K (this “Report”), the Company issued 331,818 shares of common stock to Wider and affiliates of Wider in 2024, in satisfaction of obligations pursuant to their collaborative agreement and their continuing research and development efforts. A charge to research and development was recorded in 2023 at the time the Company recognized its obligation to issue the shares pursuant to the collaborative agreement. A charge to research and development was recorded in 2024 for the continuing research and development efforts.

The investment in the Joint Venture is accounted for using the equity method of accounting. As of December 31, 2024 and 2023 the Company had an Equity Method Investment of $864 and $96,000, respectively, recorded on the consolidated balance sheets. The Company invested $96,000 in the joint venture in September 2023 and Wider invested $104,000. The Company received a distribution of $99,988 from the Joint Venture in November 2024. In accordance with ASC 323, the Company uses the equity method of accounting for its investment in the Joint Venture, an unconsolidated entity over which it does not have a controlling interest. The equity method of accounting requires the investment to be initially recorded at cost and subsequently adjusted for the Company’s share of equity in the unconsolidated entity’s earnings or losses. The Company evaluates the carrying amount of this investment in the Joint Venture for impairment in accordance with ASC 323. If the Company determines that a loss in the value of the investment is other than temporary, the Company writes down the investment to its estimated fair value. Any such losses are recorded to equity in income of unconsolidated entities in the Company’s consolidated statements of operations and comprehensive loss. The Company has made an election to classify distributions received from the Joint Venture using the nature of the distribution approach. Distributions received are classified as cash inflows from operating activities based on the nature of the activities of the unconsolidated entity.

In September of 2021, the China National Medical Products Administration (the “NMPA”), the equivalent of the FDA, approved the Gen-2 device for marketing and sale in China for the treatment of insomnia and depression. These treatment indications and clearances from the NMPA have allowed Wider to market and sell the Gen-2 device in China for the treatment of insomnia and depression.

Our participation in the Joint Venture with Wider in China is subject to general, as well as industry-specific, economic, political and legal developments and risks in China. The Chinese government exercises significant control over the Chinese economy, including but not limited to controlling capital investments, allocating resources, setting monetary policy, controlling and monitoring foreign exchange rates, implementing and overseeing tax regulations, providing preferential treatment to certain industry segments or companies and issuing necessary licenses to conduct business. In addition, we could face additional risks resulting from changes in China’s data privacy and cybersecurity requirements. Accordingly, any adverse change in the Chinese economy, the Chinese legal system or Chinese governmental, economic or other policies could have a material adverse effect on our business and operations of the Joint Venture in China and our prospects generally.

We face additional risks in China due to China’s historically limited recognition and enforcement of contractual and intellectual property rights. We may experience difficulty enforcing our intellectual property rights in China. If we cannot adequately monitor the use of our technologies and devices or enforce intellectual property rights related to our devices in China or contractual restrictions relating to use of our intellectual property by Chinese companies, our revenue could be adversely affected.

The Joint Venture with Wider is subject to laws and regulations applicable to foreign investment in China. There are uncertainties regarding the interpretation and enforcement of laws, regulations and policies in China. Because many of the laws, regulations and policies applicable to our operations in China are relatively new, the interpretations of such laws, regulations and policies are not always uniform. Moreover, the interpretation of statutes and regulations may be subject to government policies reflecting domestic political agendas. Enforcement of existing laws or contracts may be uncertain. As a result of the foregoing, it may be difficult for us to obtain timely or equitable enforcement of laws ostensibly designed to protect companies like ours, which could have a material adverse effect on our business and results of operations. Our ability to monetize the Joint Venture in China may also be limited.

Under the Joint Venture Agreement, Wider Come Limited (“Wider”), an entity formed under the laws of the Peoples Republic of China (“PRC”) and a related party, is obligated to fund all operations for the initial 12-month period of the Joint Venture, after which Nexalin and Wider plan to jointly fund the Joint Venture’s operating expenses in accordance with their pro rata ownership. No significant funding has been required since formation.

In January 2026, we established a wholly foreign-owned enterprise (“WOFE”) in the People’s Republic of China. The WOFE is wholly owned by the Company and has not commenced operations, generated revenue, or received capital contributions as of the date of this Report. The Company entered into an annual office space lease agreement, which is not material.

As of the date of this Report, no capital contributions, dividends, or other transfers of assets have occurred between the Company and its PRC subsidiary.

Regulatory Background and Matters Related to our Business

United States

Medical devices commercially distributed in the United States require either FDA clearance of a 510(k) premarket notification submission, granting of a De Novo request or Premarket Approval (PMA), unless an exemption exists. Under the FFDCA, as administered by the FDA, medical devices are classified into one of three classes — Class I, Class II or Class III — depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness. Regulatory control increases from Class I to Class III. Prior to December 20, 2019, in the United States, all cranial electrical stimulation (CES) technology was classified as a Class III medical device (high-risk).

Class II devices are moderate risk devices and are subject to the FDA’s general controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. Such special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents. Most manufacturers of Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FFDCA requesting permission to commercially distribute the device.

Class III devices are deemed the highest risk devices by the FDA and generally include life-sustaining, life-supporting or some implantable devices or devices that have a new intended use or use advanced technology that is not substantially equivalent to that of a legally marketed device. Class III devices require a PMA. For a device that is Class III by default (because it is a novel device that was not previously classified and has no predicate), the manufacturer may request that the FDA reclassify the device into Class II or Class I via a De Novo request.

To obtain 510(k) clearance, a premarket notification submission must be submitted to the FDA demonstrating that the proposed device is substantially equivalent to a predicate device. A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I (e.g., via the De Novo classification process), or a device that was previously cleared through the 510(k) process. The FDA’s 510(k) review process usually takes from three to six months but can take longer.

After a device receives 510(k) marketing clearance, any modification that could significantly affect its safety or effectiveness or that would constitute a major change or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, a De Novo request or PMA approval. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k), De Novo, or a PMA in the first instance. If the FDA disagrees with a manufacturer’s determination, the FDA can require the manufacturer to cease marketing and/or request the recall of the modified device until FDA has cleared or approved a 510(k), De Novo or PMA for the modification.

The PMA process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials. The PMA must also contain, among other things, a full description of the device and its components, a full description of the methods, facilities and controls used for manufacturing and proposed labelling. Following receipt of a PMA submission, the FDA determines whether the application is sufficiently complete to permit a substantive review. If the FDA accepts the application for review, it has 180 days under the FDCA to complete its review of a PMA, although in practice, the FDA’s review often takes significantly longer and can take several years.

On December 20, 2019, the FDA issued new rulings related to CES devices for the treatment of anxiety, depression, and insomnia. As a result of these rulings, depression treatment with CES devices remained a Class III medical device and will require a full PMA that provides definitive clinical trial evidence of effectiveness and safety. A PMA is the most extensive application and process at the FDA. All CES manufacturers had one year to prepare and file intentions for the depression treatment with a PMA. CES devices that treat anxiety and insomnia were reclassified as Class II devices and required a new application in the form of a special control trial, a summary version of a PMA, requiring safety data and mild efficacy response. All CES manufacturers had one year to complete special control trials for anxiety and insomnia. We are presently analyzing our previous 510(k) Application for such treatment of anxiety and insomnia in accordance with the FDA reclassification ruling in December 2019. Our intent is to move forward with our new 15 milliamp waveform given its success in the China studies. We have also completed 2 prototypes of a Nexalin headset which can be used at home or in a clinical setting. The new headset will utilize the new 15 milliamp waveform. Final prototypes and design files for manufacturing have been completed and clinical testing has begun.

WeThe ~~have~~PMA ~~made~~process ais ~~strategic~~more ~~decision~~demanding tothan ~~file~~the a510(k) ~~new~~premarket ~~PMA~~notification ~~for~~process. ~~the~~In ~~treatment~~a ofPMA, ~~depression with~~ the ~~Gen-2~~manufacturer ~~and~~must ~~Gen-3~~demonstrate ~~devices~~ that ~~administer~~ the ~~new~~device ~~advanced~~is ~~Nexalin~~safe ~~waveform~~and ateffective, 15and ~~milliamps.~~the ~~The~~PMA ~~Gen-1~~must ~~device~~be ~~was~~supported ~~previously cleared~~ by ~~the~~extensive ~~FDA~~data, atincluding 4data ~~milliamps and the re-classification does not prevent us~~ from ~~servicing~~preclinical ~~previously~~studies ~~sold~~and orhuman ~~leased~~clinical ~~devices~~trials. ~~Providers~~The ~~may~~PMA ~~continue~~must toalso ~~use~~contain, ~~these~~among ~~devices~~other ~~for~~things, ~~treatment~~a ~~purposes.~~full ~~Servicing~~description ~~consists~~ of ~~warranty~~the ~~coverage,~~device ~~electrode sales,~~ and ~~patient~~its ~~cable~~components, ~~replacement.~~a ~~This~~full ~~servicing~~description isof ~~included in~~ the ~~monthly~~methods, ~~lease~~facilities ~~payment.~~and Wecontrols ~~continue~~used tofor ~~derive~~manufacturing ~~revenue~~and ~~from~~proposed ~~devices~~labelling. ~~which~~Following wereceipt ~~sold~~of ora ~~leased~~PMA ~~prior~~submission, to the FDA’s ~~December 2019~~determines ~~reclassification~~whether ~~announcements. This revenue consists of monthly license fees and payment for~~ the ~~sale~~application ofis ~~electrodes~~sufficiently complete to ~~clinical~~permit ~~providers~~a ofsubstantive ~~our technology~~review. AsIf wethe ~~are~~FDA inaccepts the ~~process~~application ~~of evaluating our new Gen-2 15 milliamp waveform~~ for ~~our technology~~review, ait ~~strategic~~has ~~decision~~180 ~~was~~days ~~made~~under tothe ~~not~~FDCA ~~pursue~~to acomplete ~~PMA~~its ~~for~~review ~~the treatment~~ of ~~depression on our existing Gen-1 device. Strategy development has begun for~~ a ~~full~~ PMA, ~~for~~although ~~the~~in ~~treatment~~practice, ofthe ~~depression~~FDA’s ~~for~~review ~~our~~often ~~next~~takes ~~generation~~significantly ~~Gen-2~~longer and ~~Gen-3~~can ~~devices~~take several years.

On December 20, 2019, the FDA issued new rulings related to CES devices for the treatment of anxiety, depression, and insomnia. As a result of these rulings, depression treatment with CES devices remained a Class III medical device and will require a full PMA that provides definitive clinical trial evidence of effectiveness and safety. A PMA is the most extensive application and process at the FDA. All CES manufacturers had one year to prepare and file intentions for the depression treatment with a PMA. CES devices that treat anxiety and insomnia were reclassified as Class II devices and required a new application in the form of a special control trial, a summary version of a PMA, requiring safety data and mild efficacy response. All CES manufacturers had one year to complete special control trials for anxiety and insomnia. Our intent is to move forward with our new 15 milliamp waveform given its clinical success. We have also completed numerous prototypes of a Nexalin headset which can be used at home or in a clinical setting. The new headset will utilize the new 15 milliamp waveform. Final prototypes and design files for manufacturing have been completed and clinical testing has begun.

We have made a strategic decision to file a new PMA for the treatment of depression with the Gen-2 and Gen-3 devices that administer the new advanced Nexalin waveform at 15 milliamps. The Gen-1 device was previously cleared by the FDA at 4 milliamps and the re-classification does not prevent us from servicing previously sold or leased devices. Providers may continue to use these devices for treatment purposes. Servicing consists of warranty coverage, electrode sales, and patient cable replacement. This servicing is included in the monthly lease payment. We continue to derive revenue from devices which we sold or leased prior to the FDA’s December 2019 reclassification announcements. This revenue consists of monthly license fees and payment for the sale of electrodes to clinical providers of our technology. As we are in the process of evaluating our new Gen-2 15 milliamp waveform for our technology, a strategic decision was made to not pursue a PMA for the treatment of depression on our existing Gen-1 device.

China

Although ~~Nexalin~~the Company has no employees, orleases only one office in China and none of ~~Nexalin~~the Company’s operations are currently conducted in China, the activities of the Joint Venture may be impacted by the regulatory, liquidity, and enforcement environment in the Peoples Republic of China ~~(the “PRC”)~~.

The NMPA is the governmental authority principally responsible for the supervision and administration of medical devices in the PRC. Medical devices in the PRC (including manufacturing, marketing, and sale) are subject to a mandatory filing/registration regime regulated by the NMPA. The exact filing pathways are mainly determined by the classification of such devices — like the United States, a three-class classification system, from Class I (lowest risk) to Class III (highest risk). Local testing and clinical trials are generally required for Class II and Class III devices. Some imported devices may need to be registered with a higher-level government authority than domestic devices.

As determined by the NMPA the three classes for devices are:

●

Class I — Medical devices for which routine administration can ensure safety for users and the effectiveness of the device.

●

Class II — Medical devices that can only be safe and effective with further control in addition to routine administration.

●

Class III — Medical devices that are implanted into the patient’s body, pose a threat to the patient’s health, or provide sustenance or life support.

All medical devices must be registered with the NMPA. An overseas device company must submit product samples to test with the NMPA. In addition, all included product information, packaging, and labels, and related material need to be translated into simplified Chinese. For a Class I device, simple product filing to NMPA is required. However, for Class II and Class III medical devices, the manufacturing company must meet all the requirements in the latest regulation, guidelines, and standards.

The NMPA approved the Gen-2 15 milliamp device for the treatment of insomnia and depression. These treatment indications and clearances from the NMPA have allowed us to market and sell the Gen-2 device in China. Wider will be responsible for obtaining future NMPA registrations and approvals related to the marketing and sales of our devices in China.

~~Recent~~All ~~statements~~medical ~~and~~devices ~~regulatory~~must ~~actions~~be byregistered ~~the~~with Chinese government have targeted those companies whose operations involve cross-border data security or anti-monopoly concerns. Regarding data security, China has promulgated several important laws recently. Among them, on June 10, 2021, China promulgated the ~~PRC Data Security Law (“DSL”), which became effective on September 1, 2021~~NMPA. ~~The~~An ~~legislative~~overseas ~~intent~~device ~~for~~company ~~this~~must ~~law~~submit ~~mainly~~product ~~includes~~samples regulating data processing activities, ensuring data security, promoting data development and utilization, protecting the data related legitimate rights and interests of individuals and organizations, and safeguarding national sovereignty, security and development interests. Article 36 provides that any Chinese entity that provides the data to ~~foreign~~test ~~judicial~~with ~~or law enforcement agencies (regardless of whether directly or through a foreign entity) without approval from~~ the ~~Chinese authority would likely be deemed to be in violation of DSL~~NMPA. In addition, ~~pursuant~~all toincluded ~~Article 2 of Measures for Cybersecurity Reviews, the procurement of any network~~ product ~~or service by an operator of critical~~ information, infrastructure that affects or may affect national security shall be subjected to a cybersecurity review under the Measures. Pursuant to Article 35 of Cybersecurity Law of the People’s Republic of Chinapackaging, ~~where “critical information infrastructure operators” purchase network products~~ and ~~services~~labels, ~~which~~and ~~may~~related ~~influence~~material ~~national~~need ~~security, the operators are required~~ to be ~~subjected~~translated tointo asimplified ~~cybersecurity review~~Chinese. WeFor ~~do not operate any critical information infrastructure. As~~ a ~~result,~~Class weI ~~do not believe that these new legal requirements in China are applicable to us~~device, ~~including~~simple ~~sales~~product ~~made~~filing to ~~date~~NMPA byis ~~Wider as a distributor~~required. However, ~~the~~for ~~exact~~Class ~~scope~~II ofand ~~the~~Class ~~term~~III ~~“critical~~medical ~~information infrastructure operator” remains unclear~~devices, sothe ~~there~~manufacturing ~~can~~company bemust nomeet ~~assurance~~all ~~that~~ the ~~Joint~~requirements ~~Venture will not be subjected to critical information infrastructure operator review~~ in the ~~future.~~latest ~~Furthermore~~regulation, inguidelines, ~~the~~and ~~event that the Joint Venture becomes an operator of critical information infrastructure in the future it may be subjected to the above-described regulation~~standards.

~~With~~Wider regard to anti-monopoly concerns, Article 3 of Anti-Monopoly Law of the People’s Republic of China prohibits “monopolistic practices,” which include: a) the conclusion of monopoly agreements between operators; b) the abuse of dominant market position by operators; c) concentration of undertakings which has or may have the effect of eliminating or restricting market competition. Also, according to Article 19, the operator(s) will be ~~assumed~~responsible tofor ~~have~~obtaining afuture ~~dominant~~NMPA ~~market~~registrations position if it has following situation: a) an operator has 50% or higher market share in a relevant market; b) two operators have 66% or higher market share in a relevant market; c) three operators have 75% or higher market share in a relevant market. We believe that we have not conducted any monopolistic practices in China, and ~~that~~approvals ~~recent~~related ~~statements~~to ~~and regulatory actions by~~ the ~~Chinese~~marketing ~~government~~and dosales ~~not~~of ~~impact~~ our ~~ability~~devices ~~to conduct business, accept foreign investments, or list on a U.S. or other foreign stock exchange. However, there can be no assurance that regulators~~ in China ~~will not promulgate new laws and regulations or adopt new series of interpretations or regulatory actions which may require the Joint Venture to meet new requirements on the issues mentioned above~~.

~~Currently,~~Recent ~~these~~ statements and regulatory actions ofby ~~China~~the ~~authorities~~Chinese government have ~~had~~targeted nothose ~~impact~~companies onwhose ~~the~~operations ~~Joint~~involve ~~Venture,~~cross-border ~~including~~data ~~the~~security ~~sales~~or ~~and~~anti-monopoly ~~marketing~~concerns. ~~efforts~~Regarding ~~made~~data tosecurity, ~~date~~China ofhas ~~our~~promulgated ~~Gen-2~~several ~~devices~~important inlaws recently. Among them, on June 10, 2021, China bypromulgated ~~Wider.~~the ~~Further~~PRC Data Security Law (“DSL”), wewhich ~~are~~became aeffective ~~United~~on ~~States’~~September 1, ~~company~~2021. ~~with~~The nolegislative ~~physical~~intent ~~presence~~for inthis ~~China~~law mainly includes regulating data processing activities, ~~and~~ensuring wedata dosecurity, ~~not~~promoting ~~believe~~data ~~that~~development and utilization, protecting the ~~formation~~data related legitimate rights and interests of ~~the~~individuals ~~Joint~~and ~~Venture~~organizations, inand ~~Hong~~safeguarding ~~Kong~~national sovereignty, security and ~~any~~development ~~resultant~~interests. ~~exposure~~Article to36 ~~China~~of ~~regulatory~~the ~~actions~~DSL ~~will~~provides ~~adversely~~that ~~impact~~any ~~our~~Chinese ~~operations~~entity orthat ~~ability~~provides tothe ~~accept~~data to foreign ~~investments~~judicial or ~~list~~law ~~our~~enforcement ~~securities~~agencies on(regardless aof ~~United~~whether ~~States~~directly or ~~other~~through a foreign ~~exchange.~~entity) ~~However,~~without ~~since~~approval ~~these~~from ~~statements~~the ~~and~~Chinese ~~regulatory~~authority ~~actions~~would ~~from~~likely ~~China~~be ~~authorities~~deemed ~~are~~to ~~relatively~~be ~~recent,~~in itviolation isof ~~highly~~DSL. ~~uncertain~~In ~~how~~addition, ~~soon~~pursuant ~~legislative~~to orArticle ~~administrative~~2 ~~regulation~~of ~~making~~Measures ~~bodies~~for ~~will~~Cybersecurity ~~respond~~Reviews, ~~and~~the ~~what~~procurement ~~existing~~of orany ~~new~~network ~~laws~~product or ~~regulations~~service by an operator of critical information infrastructure that affects or ~~detailed~~may ~~implementations~~affect ~~and~~national ~~interpretations~~security ~~will~~shall be ~~modified~~subjected orto ~~promulgated,~~a ifcybersecurity ~~any,~~review ~~and~~under the ~~potential~~Measures. ~~impact~~Pursuant ~~such~~to ~~modified~~Article or35 ~~new~~of ~~laws~~Cybersecurity ~~and~~Law ~~regulations~~of ~~will~~the ~~have~~People’s onRepublic ~~our~~of ~~daily~~China, ~~business~~where ~~operation,~~“critical ~~the~~information ~~ability~~infrastructure tooperators” ~~accept~~purchase ~~foreign~~network ~~investments~~products and ~~list~~services, ~~our~~which ~~securities~~may oninfluence anational ~~United~~security, ~~States~~the oroperators ~~other~~are ~~foreign~~required ~~exchange~~to be subjected to a cybersecurity review. InWe ~~the~~do ~~event~~not operate any ~~existing~~critical orinformation ~~new~~infrastructure. ~~laws~~As ora ~~regulations~~result, orwe ~~detailed~~do ~~implementations~~not ~~and~~believe ~~interpretations~~that these legal requirements in China are ~~modified~~applicable orto ~~promulgated~~us, weincluding ~~and~~sales made to date by Wider as a distributor. However, the exact scope of the term “critical information infrastructure operator” remains unclear, so there can be no assurance that the Joint Venture ~~will~~and/or ~~take~~our ~~any~~WOFE ~~and~~in ~~all~~the ~~actions~~PRC will not be subjected to ~~remain~~critical information infrastructure operator review in ~~compliance~~the ~~with~~future. ~~any~~Furthermore, ~~such~~in ~~laws~~the orevent ~~regulations~~that orthe ~~detailed~~Joint ~~implementations~~Venture and/or ~~interpretations~~our ~~thereof~~WOFE in the PRC becomes an operator of critical information infrastructure in the future it may be subjected to the above-described regulation.

AsWith aregard ~~result~~to anti-monopoly concerns, Article 3 of ~~the~~Anti-Monopoly ~~formation~~Law of the ~~Joint~~People’s ~~Venture~~Republic of China prohibits “monopolistic practices,” wewhich ~~are~~include: ~~conducting~~a) ~~our~~the ~~clinical~~conclusion ~~research~~of ~~and~~monopoly ~~implementing~~agreements abetween ~~business~~operators; ~~distribution~~b) ~~plan~~the ~~for~~abuse ~~our~~of ~~devices~~dominant inmarket ~~China~~position ~~and~~by ~~elsewhere~~operators; ~~through~~c) ~~the~~concentration ~~Joint~~of ~~Venture,~~undertakings which wehas ~~believe~~or ~~confers~~may ~~clinical,~~have ~~commercial~~the effect of eliminating or restricting market competition. Also, ~~and~~according ~~regulatory~~to ~~advantages~~Article 19, ~~but~~the ~~may~~operator(s) ~~subject~~will usbe assumed to ~~significant~~have ~~regulatory,~~a ~~liquidity,~~dominant ~~and~~market ~~enforcement~~position ~~risks.~~if ~~Although~~it wehas dofollowing ~~not~~situation: ~~intend~~a) toan operator has 50% or higher market share in a relevant market; b) two operators have 66% or higher market share in a relevant market; c) three operators have 75% or higher market share in a relevant market. We believe that we have not conducted any ~~physical~~monopolistic ~~presence~~practices in China, ~~Hong~~and ~~Kong,~~that ~~Macau~~recent statements and ~~Taiwan,~~regulatory actions by the ~~Joint~~Chinese ~~Venture~~government ~~entity~~do ~~has~~not ~~physical~~impact ~~presence~~our inability ~~Hong~~to ~~Kong.~~conduct ~~Wider~~business, asaccept foreign investments, or list on a ~~China~~U.S. ~~formed~~or ~~entity~~other ~~with~~foreign ~~its~~stock ~~physical~~exchange. ~~presence~~However, there can be no assurance that regulators in China ~~may~~will benot ~~subject~~promulgate tonew laws and regulations or adopt new series of interpretations or regulatory actions ~~and~~which ~~prohibitions~~may ~~from~~require ~~China~~the ~~regulatory~~Joint ~~entities~~Venture and/or ~~required~~our WOFE in the PRC to ~~obtain~~meet ~~certain~~new ~~approvals~~requirements on the issues mentioned above.

Currently, these statements and regulatory actions of China authorities have had no impact on the Joint Venture and/or our WOFE in the PRC, including the sales and marketing efforts made to date of our Gen-2 devices in China by Wider. Further, we are a United States’ company with a limited physical presence in China in connection with the formation of our WOFE, and we do not believe that the formation of the Joint Venture in Hong Kong or the WOFE in the PRC and any resultant exposure to China regulatory actions will adversely impact our operations or ability to accept foreign investments or list our securities on a United States or other foreign exchange. However, since these statements and regulatory actions from China authorities are relatively recent, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list our securities on a United States or other foreign exchange. In the event any existing or new laws or regulations or detailed implementations and interpretations are modified or promulgated, we, our WOFE in the PRC and the Joint Venture will take any and all actions to remain in compliance with any such laws or regulations or detailed implementations and interpretations thereof.

As a result of the formation of the Joint Venture, we are conducting our clinical research and implementing a business distribution plan for our devices in China and elsewhere through the Joint Venture, which we believe confers clinical, commercial, and regulatory advantages, but may subject us to significant regulatory, liquidity, and enforcement risks. Although we do not intend to have any physical presence in China with the Joint Venture, Hong Kong, Macau and Taiwan, the Joint Venture entity has physical presence in Hong Kong. Wider, as a China formed entity with its physical presence in China may be subject to regulatory actions and prohibitions from China regulatory entities and required to obtain certain approvals. See “Note 11 – Subsequent Events” to the Company’s Consolidated Financial Statements for the year ended December 31, 2025, contained in this Report for more information on the formation of our WOFE in the PRC.

The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to us.

Oman

The Sultanate of Oman’s Ministry of Health granted conditional approval for use of our Gen-2 device on June 16, 2022, effective upon the end user of our device opening and operating a mental health care clinic being constructed in Oman. The Company’s first shipment of a device to Oman was made on January 30, 2024 and received in Oman on February 5, 2024 in connection with the opening of the end user’s clinic, rendering the approval effective. Two additional devices were shipped to Oman on February 29, 2024 and were received by the end user on March 6, 2024. Upon receipt of the two additional devices, the end user’s clinic was operational, and the use of the device to treat patients commenced pursuant to the approval.

Brazil

Market and Industry Background

General

Historically, pharmaceutical solutions have been the first line of treatment for those who suffer from anxiety, insomnia, depression, and other mental health disorders. Beginning in 1950, for patients that were not responding to medication, ECT, also called “shock therapy,” became available. Over time, researchers began to look at alternative ways to inject electricity into the human brain. One such method was via implantable neurostimulators that required invasive surgery procedures associated with high cost and high risk. Implantable devices became the potential solution for those who would not take or could no longer take pharmaceuticals. The interest in electricity continued with the creation of small handheld devices powered by a direct current (DC) battery that the consumer could buy without any medical supervision. Clinical versions of DC stimulators, known as transcranial direct current stimulation (tDCS), were developed by researchers; many of these devices are still in research settings without industry support.

In 1992, a new neurostimulation technique emerged called trans-cranial magnetic stimulation (TMS). This technique evolved into repetitive trans-cranial magnetic stimulation (rTMS), which utilized repetitive magnetic pulse energy to stimulate the brain of patients struggling with depression. The American pharmaceutical industry embraced and funded this technology. The FDA cleared rTMS only for patients who had failed to respond to anti-depressants. Side effects, high cost and moderate efficacy continue to burden this technology sector.

Both insurance companies and healthcare providers are looking for alternative ways to decrease costs while still providing safe and effective treatments.

We believe that our new marketing and growth strategy in combination with our advanced 15 milliamp waveform, technological upgrades and the development of a modern headset monitored with our IT management platform, will position us for the opportunity to disrupt the traditional mental health treatment model. Our mission is to remove the stigma of expensive psychotherapy or pharmaceuticals with the attendant side effects and dependency issues and replace it with clinically proven and cost-effective technology that is easily accessible in the privacy of the patient’s home and monitored by licensed healthcare providers.

Anxiety Market

Anxiety disorders are considered the most prevalent of psychiatric disorders. Anxiety disorders include generalized anxiety disorder, social anxiety disorder, panic disorder, obsessive-compulsive disorder, post-traumatic stress disorder (PTSD) and phobias.

Insomnia Market

Insomnia is a common sleep disorder considered to be responsible for at least $63 billion in direct and indirect healthcare costs each year, according to the Harvard American Insomnia Study. A frightening number of insomnia cases are undiagnosed and untreated, even as the condition becomes a mounting financial burden on America’s employers and the healthcare system. Data surrounding sleep disorders demonstrate that insomnia is a growing problem that shows no signs of slowing down. Current market conditions present an opportunity to introduce technology that provides a safe, effective and drug-free alternative for those suffering from insomnia. We believe we have the ability to decrease the number of potentially addictive insomnia prescriptions needed by patients and offer physicians a non-pharmaceutical option to provide their patients. Additionally, we are developing a solution for home-based treatment for chronic insomnia and to improve sleep hygiene for its users.

Depression Market

Depression continues to be the leading cause of medical disability around the world. Poor efficacy, risk and adverse side effects of current anti-depressants are driving the preference for non-pharmacological therapies, which will limit growth for the pharmaceutical sector of the depression treatment market. This limitation will enhance the research and development of novel therapies that treat depression safely and effectively without adverse side effects. Historically, according to the U.S. Centers for Disease Control and Prevention (CDC), only one-third of people with severe depression have taken anti-depressants.

Any decline in the depression medication market should indirectly accelerate the growth of the neurostimulator market. Management believes that, based on the market data and current trends, the depression market — like the anxiety and insomnia market — creates enormous potential for our products.

Prior to December 2019, our Gen-1 device was considered a Class III device. Treatment of depression in the United States is limited to Class III devices only. Prior to 2019, our existing Gen-1 4 milliamp medical device had been used to successfully treat depression in the U.S. The Gen-2 15 milliamp version of our device when introduced into the United States will be subject to approximately eighteen to twenty-four months of clinical study before our PMA application for depression will be accepted. Assuming we will be able to obtain successful classification from the FDA, we expect to market our device in the United States as a treatment for depression.

Substance Use Disorders (Opioid Addiction) Market

According to the National Institute on Drug Abuse (NIDA) substance use, and substance use disorders cost the United States more than $740 billion a year in healthcare, crime and lost productivity costs; but dollars barely capture the devastating human cost of addiction to individuals, families and communities. ~~According~~Based toon the most recent data available from the National Survey on Drug Use and Health, 19approximately 48.74 million ~~adults~~individuals aged 12 or older in the United States ~~suffered~~experienced ~~from~~ a substance use disorder. inWhile ~~2017~~this data highlights the widespread nature of substance-related conditions, actual demand for treatment solutions may vary and is subject to numerous factors beyond prevalence alone.

The current success rate of the best drug and alcohol rehabilitation facilities is minimal. We believe that this represents a significant market opportunity for our company. The disease of addiction is brain-based in its nature. Currently brain-based treatments for the disease are only available to patients who can afford long-term expensive boutique treatment centers. We intend to demonstrate that a brain-based approach to addiction treatment will enhance a patient’s success at long-term recovery. Our hypothesis is that the current pilot study design at The University California, San Diego will provide a source of validation for this treatment modality in addiction treatment.

Chronic Pain Market

Originally, our waveform was designed as an electro-analgesic for pain. This refers to the ability to electrically interrupt the pain signaling process in the brain. By interrupting the pain signaling process in the brain, our products can reduce symptoms and discomfort associated with chronic pain. By reducing the symptoms and discomfort associated with chronic pain, physicians can reduce medications and avoid dependency issues related to opiate-based medications.

According to Research and Markets, the global chronic pain treatment market is predicted to progress at a CAGR of 7% and generate revenue of $173 billion in 2033.

Currently, we own an electrostimulation patent for a device that will apply electrodes to the brain, spine, and the place of injury. The placement of these electrodes in conjunction with our various waveforms creates an opportunity for us to treat chronic pain without medication. The Nexalin executive team is ~~preparing~~reviewing strategies to develop a prototype of our existing patented design and introduce it into clinical trials for the treatment of chronic pain. In previous pilot studies, our existing Gen-1 product reduced pain in patients suffering from injuries originating in industrial accidents. However, we plan to use the new advanced waveform emitted at 15 milliamps into the new prototype pain device for new clinical trials for the treatment of chronic pain.

Alzheimer’s Disease and Dementia Market

Alzheimer’s disease is a degenerative brain disease and the most common form of dementia. Dementia is not a specific disease, but rather an overall term that describes a group of symptoms. According to the World Health Organization (WHO), there are around 50 million people living with Alzheimer’s disease and other dementias worldwide.

According to Reports and Data, the global Alzheimer’s therapeutics market is projected to reach $13.7 billion by 2030 from $2.2 billion in 2020 with a substantial compound annual growth rate (CAGR) of 20% through the forecast period.

We believe our products could be leveraged to extend the quality of life for millions of people who are diagnosed with Alzheimer’s disease.

Marketing and Sales Efforts

We believe that our marketing and sales plan provides a long-term scalable business model. Our team will prepare the foundation and marketing assets necessary to launch the new virtual clinic model that will complement the traditional clinic model. Our sales model is to place more than 1,000 Gen-2 and Gen-3 devices on the global stage. The momentum and branding strategies of Nexalin providers will be leveraged to enhance the launch of a global sales plan. The Gen-2 device at 15 milliamps supported by the Gen-3 outpatient headset and our virtual digital management platform is intended to disrupt the current mental healthcare model. The Gen-2 and Gen-3 devices at 15 milliamps will offer patients a cost effective and efficient treatment model for day-to-day mental health challenges. We believe those devices, with their advanced waveform, can treat existing mental health disorders associated with anxiety and insomnia. Additionally, new strategies are in research and development for FDA treatment indications of depression, substance use disorder, TBI (traumatic brain injury), PTSD, opioid addiction, alcoholism and chronic pain. Additional research and treatment efficacy are being investigated for the Alzheimer’s community for patient care and management.

Our plan is designed to triangulate and stimulate the physician, consumer, and manufacturer relationship. Trends in healthcare indicate consumers are involved in treatment decisions that concern their mental health. Because of the advancement in healthcare technologies, home-based care with medical supervision provides patients with a cost-effective and efficient treatment option. Home-based care also avoids the stigma associated with treatment for mental health disorders. In our current sales plan, we intend to launch with a physician provider in each state. These physicians are intended to lead the Nexalin campaign in each state as that state’s primary provider. These preferred state providers are intended to begin with the virtual clinic. Our digital marketing team will work towards driving consumers with quality-of-life struggles related to mental health issues into the virtual clinic and then to the provider in the consumer’s state of residence. These initial state physicians providing mental health services in the virtual clinic, will also have the ability to offer treatment in their clinic. The in-clinic model will use the Gen-2 clinical device, SYNC, while the virtual clinic will use the Gen-3 headset, HALO. This initial launch plan with state providers will develop and support multiple marketing verticals to drive the Nexalin brand and treatment as an alternative to medications and psychotherapy. We will work towards ~~levering~~leveraging this physician / patient community to establish a national network of physicians that offer mental health evaluations and the Nexalin treatment in either a clinical setting or in the privacy of the patient’s home with medical supervision through the ~~future~~ Nexalin app.

Most, if not all, patients treated in the Nexalin virtual clinic would be part of a digital community that supports brand awareness and the sharing of anonymous treatment outcomes in a social media setting. The Patient Activation Program will include a robust data gathering system on providers and patients (opt-in) that should enhance our marketing strategies.

In addition to our core business model, we have also formed a Military & Government Advisory Board aimed at fostering and enhancing relationships within and throughout United States federal government and public sector organizations, including the U.S. Department of Defense, U.S. Department of Veterans Affairs, and U.S. Department of Health and Human Services. In conjunction with our ongoing clinical trials, our goals include the broad deployment of our devices within the U.S. military and government agencies. The clinical study conducted by The University of California, San Diego provided positive results in evaluating Nexalin’s Gen-2 tACS device for reducing pain in veteran patients with Mild Traumatic Brain Injury (mTBI).

Insurance Reimbursement for Our Products

In January 2020, the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Durable Medical Equipment for Medicare Administrative Contractors issued a code for Cranial Electrotherapy Stimulators (CES). CMS issues codes that are used by medical practitioners to obtain Medicare, Medicaid and private insurance reimbursement. The issuance of this code is the first time that a reimbursement code from CMS has been designated specifically for CES. The code does not guarantee reimbursement and is considered at this time, experimental. The Nexalin executive team plans to continue preparing clinical data and durability data to pursue long term clinical reimbursement.

Reimbursement strategies for this type of technology are complex and vary from one diagnosis to another. Nexalin plans to utilize an RFID system that will track treatments completed. This will simplify comparing our devices to pharmaceutical interventions. Beginning in 2024, a complete reimbursement assessment is being conducted and evaluated to develop a strategy to acquire reimbursement. We will employ a two-prong approach for eventual reimbursement. The first prong will evaluate the clinic-based product offered by physicians. The second prong will focus on tracking usage and response from the outpatient headset model that is tracked through the virtual platform. Frequently therapies that are used in the home are not classified as durable medical equipment and will fall into a reimbursement gap without coverage. We intend to work to successfully achieve a Level 2 code under the healthcare common procedure coding system. We will work to seek reimbursement for conditions in sequence with the home based and the clinic-based unit that will maximize value of treatment from a financial standpoint as well as monitoring the response by the patient community.

Research

Research is the fundamental core of any pharmaceutical or medical device company. Although small trials, with limited patients, can show promise for a treatment, they are generally not acceptable to the FDA for product approval. To commercialize a product for widespread use, multiple large-scale trials are required to demonstrate both efficacy and safety. In the past two decades, the cost of conducting such trials has more than doubled, with many small start-up companies unable to raise the necessary capital to complete these vital projects. The increase in cost reflects several variables which are required for successful clinical trial completion.

The various costs can include patient recruitment and retention expenses, physician, and nurse expenses, as well as the expenses of other healthcare providers. Various regulations, each more complex than the next, also have added significant cost to the process. Data collection, as well as data analysis, is also a significant portion of the study cost. Additionally, almost all studies are conducted through either a large university, with its underlying overhead for administrative costs and institutional review board approval, or through a contract research organization, which also adds significant overhead costs in addition to the hard cost of the study itself. Latest estimates for the cost per patient for an average trial is approximately $41,000.

In 2019, we began a research partnership with The University California, San Diego. Prior to the pandemic, two pilot clinical studies were undertaken with UCSD, however, these trials were paused due to the shutdown of college campuses in California. Beginning in the summer of 2022 and continuing to present, new discussions began to explore strategies for PTSD, Substance Use Disorder (SUD) and Opiate dependency and mild traumatic brain injury (mTBI) with our new Gen-3 headset.

The study at UCSD is focused on veterans suffering from mild traumatic brain injury (mTBI) and is funded by the United States Department of Defense. One of the primary symptoms associated with mTBI is PTSD (post-traumatic stress disorder). The primary endpoint associated with this study will be the assessment and reduction of post-concussion symptoms associated with PTSD. A secondary endpoint for the study was improvement and MEG slow-wave abnormalities.

In addition to UCSD, we are discussing additional strategies to initiate further trials to address new FDA guidelines. These new strategies and pivotal trials will support new 510(k)s and/or De Novo applications for anxiety, insomnia and other treatment indications at 15 milliamps. These trials are in addition to the special control trials required by the FDA. Other areas of research and strategy development that will be designed and funded relate to the treatment of SUD, TBI, PTSD, Alzheimer’s disease, and dementia.

Additional research in China is being performed by Wider with the goal of publishing the findings in a peer reviewed journal. All research will be controlled by our team, with all trial designs requiring written final approval by our Chief Medical Officer. Clinical updates will be required every 30 days. Frequent in-person WeChat meetings will also be performed to ensure the integrity of the research efforts.

In addition to clinical trials in China and current studies in the United States required by the FDA, an additional study will be designed and planned with the 15 milliamp Gen-2 and Gen-3 devices to evaluate a large cohort of patients with ~~depression~~insomnia. This trial will include a double-blind study design with active and sham groups. Patient selection screening will evaluate ~~200~~150-~~250~~200 subjects to acquire the number of patients needed for a successful trial. Each patient, upon enrollment, will be evaluated extensively prior to initiation of therapy. Patients will be treated a minimum of 20 separate times, with pre- and post-test screening. Moreover, upon completion of therapy, post-test examination will be performed not only immediately thereafter but also over the course of one to three months to establish not only efficacy but durability of the treatment. The results of this study will provide the basis of the PMA with the FDA for the treatment of ~~Depression~~Insomnia.

At the start of 2021, an Alzheimer’s specific clinical trial was underway in China: “Transcranial alternating current stimulation for patients with mild Alzheimer’s disease.” Extensive cognitive pre- and post-evaluations are being performed at the beginning and conclusion of the study, with less rigorous evaluations before and after each therapy session. Additionally, results of this trial will dictate additional testing strategies to determine specific treatment protocols for complex Alzheimer’s and dementia patients.

A final area of study includes the evaluation of chemical changes within the brain following transcranial stimulation. Chemicals, which are naturally formed in the brain, control many of our moods and thoughts, modulating feelings of pain, depression and generalized mood. These substances also drive cravings in substance use disorders. One of the specific areas of research is to validate changes of serotonin levels in the brain. Serotonin is a “feel good” chemical which has also been associated with learning. Other chemicals, such as dopamine, act in a reward center mechanism. Additionally, certain other neurons require specific chemicals to either fire or be inhibited from firing. These areas can be explored with specific radioactive markers in the brain for evaluation with PET MRI scans.

Clinical trials for the Gen-2 device were conducted in China during 2023. These clinical trials were funded by Wider, and its related companies, and was conducted at the Xuanwu Hospital, Capital Medical University in Beijing, China. The results were also published in General Psychiatry, an open-source, peer-reviewed scientific journal. The published results of the study concluded that repeated treatment with the Company’s neurostimulation device suggests an acute effect in reducing depressive symptoms in patients with treatment-resistant depression (“TRD”). In addition, no adverse events were observed during treatment. As part of the clinical study, 7 migraine patients were treated at the Xuanwu Hospital. Treatment was administered for 4 consecutive weeks via the forehead and both mastoid (twice per day, five days a week). Efficacy and adverse reactions were assessed at a two-week screening/baseline period followed by a four-week treatment phase. The study concluded that twice daily 15mA tACS, a unique form of non-invasive brain stimulation, offers an acute effective intervention for patients with TRD. The study showed that all patients with TRD had a significant reduction in depression symptoms after the four-week treatment, and all of them achieved a clinical response (defined as HAMD-17/ MADRS scores that decreased by 50% or more from the baseline). Additional Insomnia clinical trial results are expected in Q2late ~~2024~~2026 with additional submissions for publication.

Virtual Clinic Digital Management Platform

We expect to capitalize on the post pandemic digital health model. Our team began researching IT digital development firms during the pandemic. We have now completed our research and have begun developing our virtual clinic on a digital platform with a leading IT design team. The proprietary IT management platform that will eventually manage all aspects of the Nexalin virtual clinic model. The vision is to implement a virtual clinic model that will enable providers and clinics to integrate remote outpatients into an overall treatment process. Our IT platform goes well beyond telehealth and is designed to support all aspects of the treatment and business model in conjunction with various data sets to support marketing, data collection and patient monitoring. Our digital management platform will manage the entire clinical and outpatient headset business model. The proprietary IT platform will manage all aspects of a new virtual clinic related to treatment of various mental health disease indications. As the development of the new generations of our devices and the outpatient headset are developed, the digital platform will eventually manage and triangulate the relationship between the medical professional, the patient, and the manufacturer. The digital platform will handle logistics, data collection and user experience data for clinical evaluation. Additionally, there will be an app that the patients will install on their phones that will communicate with the outpatient headset. The app will upload user information that is HIPAA compliant to the IT management platform in the cloud. Modules will eventually be designed and implemented in the platform to collect biometric data. Biometric data will be utilized to evaluate patient response. A symptom exam for additional clinical validation will eventually be offered in the app. All data and user information will be stored in a secure, HIPAA compliant cloud computing center and access to the information will be managed through a secure and compliant dashboard management system. The medical professional will have access to all data to monitor outpatient experience, client response and general health and wellness information.

We will leverage our IT investment to create a lead management system for mental health physicians connecting prospective patients with providers. The medical professional will be able to engage in a telehealth virtual appointment with prospective patients to complete an evaluation and assess whether the patient is a candidate for the outpatient headset program. After the professional approves the device for the patient, we will automatically prepare shipment of the device directly to the outpatient consumer from the manufacturer. We will have an internal department to monitor shipment, and to answer questions through a help desk on how to set up and use the device. The medical professional can be reimbursed for the virtual appointment via the outpatient’s insurance for telehealth care which is becoming part of the new normal in the post-pandemic, digital-health world.

Additional design and implementation of modules related to social media marketing, bio-metric data collection and user experience will eventually complete the design of the IT management platform.

Manufacturing

~~Currently,~~Nexalin’s weneurostimulation ~~have~~devices aare ~~quality~~manufactured ~~assurance~~primarily ~~and~~through ~~manufacturing~~third-party ~~agreement~~contractors ~~with Apical Instruments~~ in ~~Redwood~~the ~~City,~~United ~~California~~States. ~~Additionally,~~The inCompany ~~December 2024,~~relies weon ~~entered~~these ~~into~~manufacturers afor ~~supplier~~the ~~quality agreement with Velentium~~assembly, ~~an FDA-registered manufacturer located in Ft. Hood County~~testing, ~~Texas,~~and ~~to ensure~~ quality assurance of ~~our~~its products. WeAll ~~currently have enough design and~~ manufacturing ~~support~~is ~~and~~conducted ~~inventory~~in toaccordance ~~meet~~with ~~all~~applicable ~~projected~~regulatory ~~company~~standards, ~~design~~including ~~and~~FDA ~~sales~~quality ~~goals~~system regulations. ~~Our~~Nexalin ~~regulatory~~believes ~~team~~that ~~works~~its ~~closely~~relationships with ~~the~~these ~~Velentium~~manufacturers ~~quality~~are ~~team~~sufficient to ~~ensure~~meet ~~all~~ current ~~compliance~~production requirements, and ~~testing~~it ~~standards~~maintains ~~are~~alternate ~~adhered~~suppliers ~~to.~~where ~~All~~feasible ~~distribution~~to ~~channels~~mitigate ~~will~~supply ~~rely~~chain ~~on a collaboration between the Velentium and Nexalin teams~~risks.

Intellectual Property

Patents

Our policy is to seek to protect our proprietary and intellectual property position by, among other methods, filing United States and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business. We file patent applications directed to our key products to establish intellectual property positions. These patent applications are intended to protect these products as well as their uses in the treatment of diseases. We are the owner of ~~three~~5 ~~existing~~U.S. non-provisional utility patents, 2 U.S. design patents, 14 foreign design patents (all expiring between 2029 and ~~four~~2040). In addition, we have 3 pending ~~patents~~non-provisional U.S. utility patent applications, 14 pending foreign non-provisional utility patent applications and 1 pending foreign design patent application related to the electro-stimulation techniques related to our products and services. Our current patents cover a therapeutic electro-stimulation apparatus (the medical device) and the software used to create and administer the stimulation to the patient and our core technology utilized in the Gen-2 and Gen-3 system. We expect to file additional provisional and non-provisional patent applications and copyright protection pertaining to future Generation technology, proprietary software, and trademarks. The patent claims associated with the non-provisional patent applications will be defined and prepared in the filings. The intention is to continue building an intellectual property portfolio asset. Future research and development projects related to advancements in neurostimulation and neuromodulation technology will be identified and investigated for future patent filings.

Trademarks

In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we routinely seek to create protection for our marks and enhance their value by pursuing trademarks and service marks where available and when appropriate. Our trademark portfolio currently consists of registered trademark rights for the mark, NEXALIN TECHNOLOGY and NEXALIN, in the United States and various foreign regions.

The current versions of the Gen-2 and Gen-3 devices are the culmination of two projects, each respectively spanning the last four years, conducted by Nexalin’s research and development team. As part of such projects, we are in the process of rebranding the Gen-2 and Gen-3 systems. The Gen-2 system, now equipped with a newly enhanced modern enclosure containing the 15 milliamp advanced waveform, will be marketed as “Gen-2 SYNC” and will be distinguished from the predecessor version of Gen-2 referred to as the “Original Gen-2.” The Gen-3 headset, with its pioneering capability to deliver treatment in the comfort and privacy of a patient’s own home, will be marketed as “Gen-3 HALO.” Nexalin has also filed anrelated ~~application~~applications for trademark registration in the United States, and some limited foreign regions and will ~~fill~~file additional applications for appropriate trademarks in ~~China, Europe and~~ other countries, in connection with the rebranding. We have filed for NEXALIN SYNC in the US and various countries and “HALO” in the US. For the sake of clarity, the discussion herein collectively refers to Nexalin’s devices only as Gen-2 and Gen-3 without further differentiation resulting from the rebranding.

Trade Secrets and Other Proprietary Information

In addition to patents and trademark protection, we rely upon on the skills, knowledge, and experience of our scientific and technical personnel, as well as that of our advisors, consultants and other contractors, to develop and maintain our competitive position. To help protect our proprietary know-how and continuing technological innovation that is not patentable, we rely on trade secret protection and confidentiality agreements to protect our interests. As part of our hiring practices and as described in our Code of Ethics which is binding on all employees, our employees, consultants, and advisors are prohibited from disclosing confidential information and are required to assign to us the ideas, developments, discoveries and inventions important to our business.

Competition

Our commercial success depends in part on our ability to: obtain and maintain proprietary or intellectual property protection for our products, our core technologies and other know-how; operate without infringing on the proprietary rights of others; and prevent others from infringing on our proprietary or intellectual property rights. Our policy is to seek to protect our proprietary and intellectual property position by, among other methods, filing United States and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business. We also rely on the skills, knowledge, and experience of our scientific and technical personnel, as well as that of our advisors, consultants and other contractors. To help protect our proprietary know-how that is not patentable, we rely on trade secret protection and confidentiality agreements to protect our interests. As part of our hiring practices and as described in our Code of Ethics which is binding on all employees, our employees, consultants, and advisors are prohibited from disclosing confidential information and are required to assign to us the ideas, developments, discoveries and inventions important to our business.

We file patent applications directed to our key products to establish intellectual property positions. These patent applications are intended to protect these products as well as their uses in the treatment of diseases. We are the owner of 5 U.S. non-provisional utility patents, 2 U.S. design patents, 14 foreign design patents, pending non-provisional U.S. utility patent applications, 14 pending foreign non-provisional utility patent applications and 1 pending foreign design patent application related to the electro-stimulation techniques related to our products and services. Our current patents cover a therapeutic electro-stimulation apparatus (the medical device) and the software used to create and administer the stimulation to the patient and our core technology utilized in the Gen-2 and Gen-3 system. We expect to file additional provisional and non-provisional patent applications and copyright protection pertaining to future Generation technology, proprietary software, and trademarks. The patent claims associated with the non-provisional patent applications will be defined and prepared in the filings. The intention is to continue building an intellectual property portfolio asset. Future research and development projects related to advancements in neurostimulation and neuromodulation technology will be identified and investigated for future patent filings.

WeOur ~~file~~trademark ~~patent~~portfolio ~~applications~~currently ~~directed~~consists toof ~~our~~registered ~~key~~trademark ~~products~~rights tofor ~~establish~~the ~~intellectual~~mark, ~~property~~NEXALIN ~~positions.~~TECHNOLOGY ~~These~~and ~~patent~~NEXALIN, ~~applications are intended to protect these products as well as their uses~~ in the ~~treatment~~United ofStates ~~diseases.~~and Wevarious ~~are~~other ~~the~~foreign ~~owner~~regions. ofIn ~~three~~connection ~~existing~~with ~~patents and four pending patents related to~~ the ~~electro-stimulation~~ongoing ~~techniques~~development ~~related~~and toadvancement of our products and services. ~~Our~~in ~~current~~the ~~patents~~United ~~cover~~States aand ~~therapeutic~~various ~~electro-stimulation~~international ~~apparatus~~jurisdictions, ~~(the~~we ~~medical~~routinely ~~device)~~seek ~~and~~to ~~the~~create ~~software~~protection ~~used~~for toour ~~create~~marks and ~~administer~~enhance ~~the~~their ~~stimulation~~value toby ~~the~~pursuing ~~patient~~trademarks and ~~our~~service ~~core~~marks ~~technology~~where ~~utilized~~available ~~in the Gen-2~~ and ~~Gen-3~~when ~~system~~appropriate. WeIn ~~expect~~addition to ~~file~~patents ~~additional provisional~~ and ~~non-provisional~~trademark ~~patent applications and copyright~~ protection, ~~pertaining~~we torely ~~future~~upon ~~Generation~~unpatented ~~technology,~~trade ~~proprietary~~secrets ~~software,~~ and ~~trademarks. The patent claims associated with the non~~know-~~provisional~~how ~~patent applications will be defined~~ and ~~prepared~~continuing intechnological ~~the~~innovation ~~filings. The intention is~~ to ~~continue~~develop ~~building an intellectual property portfolio asset. Future research~~ and ~~development~~maintain ~~projects~~our ~~related~~competitive ~~to advancements in neurostimulation and neuromodulation technology will be identified and investigated for future patent filings~~position.

Our trademark portfolio currently consists of registered trademark rights for the mark, NEXALIN TECHNOLOGY, in the United States. In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we routinely seek to create protection for our marks and enhance their value by pursuing trademarks and service marks where available and when appropriate. In addition to patents and trademark protection, we rely upon unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position.History

~~Corporate~~We ~~Information;~~were ~~Initial~~originally ~~Public~~formed ~~Offering~~as ~~and~~a ~~Follow-~~Nevada corporation on October 19, 2010, as Nexalin Technology, Inc. (“Nexalin Nevada”). On ~~Offering;~~December ~~Employees~~1, 2021, we completed a corporate reorganization pursuant to which Nexalin Nevada merged with and into a newly incorporated Delaware company of the same name, “Nexalin Technology, Inc.,” and, as a result, Nexalin succeeded Nexalin Nevada and our existing shareholders exchanged each of their shares in Nexalin Nevada for one twentieth (1/20th) of a common share of the newly formed Delaware corporation.

WeCorporate were originally formed as a Nevada corporation on October 19, 2010, as Nexalin Technology, Inc. On December 1, 2021, we completed the corporate reorganization pursuant to which Nexalin Nevada merged with and into a newly incorporated Delaware company of the same name, Nexalin and, as a result, Nexalin succeeded Nexalin Nevada and our existing shareholders exchanged each of their shares in Nexalin Nevada for one twentieth (1/20th) of a common share of the newly formed Delaware corporation. Nexalin had nominal assets and liabilities and did not conduct any operations prior to the reorganization other than its incorporation.Information

We completed the closing of our initial public offering on September 16, 2022. A registration statement on Form S-1 (File No. 333-261989) was filed with the Securities and Exchange Commission (“SEC”), which became effective on September 15, 2022. A final prospectus relating to the offering was filed with the SEC and is available on the SEC’s website at http://www.sec.gov.

Our shares and warrants began trading on the Nasdaq Capital Market tier of the Nasdaq Stock Market (“Nasdaq”) on September 16, 2022, under the symbols “NXL” and “NXLIW”, respectively.

We also completed the closing of a follow-on offering on July 1, 2024. A registration statement on Form S-1 (File No. 333-279684) was filed with the SEC, which became effective on June 27, 2024. A final prospectus relating to the offering was filed with the SEC and is available on the SEC’s website at http://www.sec.gov.

Properties

Our principal executive offices are located at 1776 Yorktown, Suite 550, Houston, Texas 77056. Our phone number is (832) 260-0222. Our website address is www.nexalin.com. We do not incorporate the information on or accessible through our website into this Report. We have included our website address in this Report solely as an inactive textual reference.

In addition, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Exchange Act requires us to file periodic reports, proxy statements, and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC’s website at http://www.sec.gov.

Human Capital Resources

WeAs ~~currently~~of ~~have~~December 31, 62025, ~~full~~we had 8 full-time employees, ~~one~~our ~~part~~CMO ~~time~~is ~~employee~~a consultant and ~~approximately~~we 7utilize ~~consultants~~varying atlevels ~~different~~of ~~times~~other ~~working on various projects~~consultants. These consultants, and our legal and financial advisors assist us in various areas related to regulatory, engineering, research and development, sales and marketing, legal, financial and other miscellaneous tasks necessary to run our business on day-to-day basis and to facilitate the development of new products.

None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good. We have historically utilized contractors to perform many of our services. Through this process, we believe that we have attracted highly qualified professionals.

Compensation and Benefits

We believe that our future success largely depends upon our continued ability to attract and retain highly skilled employees. Medical device companies, both large and small, compete for a limited number of qualified applicants to fill specialized positions. To attract qualified applicants as we attempt to scale our business, we will need to offer a total rewards package consisting of base salary and cash target bonus, a comprehensive benefit package and equity compensation to select employees. Bonus opportunity and equity compensation is expected to increase as a percentage of total compensation based on level of responsibility, and actual bonus pay-out would be based on performance. Pursuant to our 2023 Equity Incentive Plan (the “2023 Plan”), our ~~board~~Board of Directors is authorized to grant stock options and other stock awards to our employees, directors and consultants.

Health, Wellness and Safety

We believe that the safety and health of our employees and their families is essential to our business. Our culture is driven by a desire to do what is right, and we strive to support the well-being of our employees. We prioritize the safety and well-being of our employees even after they have faced both mental and physical challenges ~~related to the COVID-19 pandemic~~.

Implications of Being an Emerging Growth Company and a Smaller Reporting Company

We qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Start-ups Act of 2012, as amended, or the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from some of the reporting requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

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being permitted to present only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations disclosures;

●

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act;

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not being required to comply with any requirements that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

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reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and

●

exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We may take advantage of these exemptions until the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering which was completed on September 16, 2022. However, if any of the following events occur prior to the end of such five-year period, (i) our annual gross revenue exceeds $1.235 billion, (ii) we issue more than $1.0 billion of non-convertible debt in any three-year period or (iii) we become a “large accelerated filer,” (as defined in Rule 12b-2 under the Exchange Act), we will cease to be an emerging growth company prior to the end of such five-year period. We will be deemed to be a “large accelerated filer” at such time that we (a) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of our most recently completed fiscal year, (b) have been required to file annual and quarterly reports under the Exchange Act, for a period of at least twelve months and (c) have filed at least one annual report pursuant to the Exchange Act. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are emerging growth companies. As a result, changes in rules of U.S. generally accepted accounting principles or their interpretation, the adoption of new guidance or the application of existing guidance to changes in our business could significantly affect our financial position and results of operations.

We are also a “smaller reporting company” as defined in the Exchange Act. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is more than $250 million measured on the last business day of our fiscal year, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our fiscal year.

ITEM 1A. RISK FACTORS

Our business is subject to numerous risks. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this Annual Report on Form 10-K, including our audited consolidated financial statements and the related notes. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us. If any of the following risks occur, our business, financial condition, results of operations and future growth prospects could be materially and adversely affected. In such event, the trading price of our common stock could decline and you might lose all or part of your investment.

Risks Related to Our Financial Position and Capital Needs

We have incurred significant losses since our inception. We expect to incur losses over the next several years and may never achieve or maintain profitability.

We are a Delaware corporation with a limited operating history. We have funded our operations to date primarily with proceeds from private investors and the sale of our stock, including the proceeds from our initial public offering completed in September 2022 and a follow-on offering completed in July 2024 and May 2025. We have had only limited sales of our products and services to date. For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, we incurred a ~~comprehensive~~net loss in the amount of approximately $78,~~607~~222,~~290~~000 and $47,~~685~~607,~~427~~000, respectively. Our accumulated deficit as of December 31, ~~2024~~2025 and ~~2023~~2024, was approximately $8492,~~645~~867,~~231~~000 and $7784,~~038~~645,~~049~~000, respectively.

We have devoted a substantial portion of our financial resources and efforts to research and development, including preclinical studies and clinical trials. We are still in the early stages of development of our products.

We expect to continue to incur significant expenses and operating losses over the next several years. Our net losses may fluctuate substantially from quarter to quarter and year to year. We anticipate that our expenses will increase significantly as we:

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continue our ongoing and planned preclinical and clinical development of our existing and next Generation devices;

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initiate preclinical studies and clinical trials for any additional products that we may pursue in the future;

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seek to discover and develop additional treatment indications;

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seek regulatory approvals for any products that successfully complete clinical trials;

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ultimately establish sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any product for which we may obtain regulatory approval and intend to commercialize on our own;

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maintain, expand and protect our intellectual property portfolio;

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engage additional clinical, scientific, manufacturing and controls personnel;

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add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and

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incur additional legal, accounting and other expenses associated with operating as a public company.

To become and remain profitable, we and our collaborators must succeed in developing and eventually commercializing future and existing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our products and preclinical program, obtaining regulatory approval, manufacturing, marketing and selling any products for which we may obtain regulatory approval, as well as discovering and developing additional products. Again, we are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability.18

18To become and remain profitable, we and our collaborators must succeed in developing and eventually commercializing future and existing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our products and preclinical program, obtaining regulatory approval, manufacturing, marketing and selling any products for which we may obtain regulatory approval, as well as discovering and developing additional products. Again, we are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability.

Because of the numerous risks and uncertainties associated with product development, we are unable to accurately predict the timing or amount of expenses or when, or if, we will be able to achieve profitability. If regulatory authorities require us to perform studies in addition to those currently expected, or if there are any delays in the initiation and completion of our clinical trials or the development of any of our products, our expenses could increase.

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 common stock and could impair our ability to raise capital, expand our business, maintain our research and development efforts or continue our operations. A decline in the value of our common stock could also cause you to lose all or part of your investment.

We may not be able to continue as a going concern if we do not execute our business plan or obtain additional financing in the future if necessary.

Our independent accountant’s audit report included on this ~~Form~~Report ~~10-K~~ states that there is substantial doubt about our ability to continue as a going concern. We have incurred only losses since our inception, raising substantial doubt about our ability to continue as a going concern. Therefore, our ability to continue as a going concern is highly dependent upon us executing our business plan in the planned amount of time allotted and obtaining additional financing for our planned operations, if necessary. There can be no assurance that we will be able to raise any additional funds, or if we are able to raise additional funds, that such funds will be in the amounts required or on terms favorable to us.

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

We commenced active operations in 2010, and our operations to date have been largely focused on raising capital, identifying and developing our products and preclinical program, broadening our expertise in the development of our products and undertaking preclinical studies and conducting early-stage clinical trials. As a result of the FDA reclassification ruling in December 2019, we had to suspend marketing of our Gen-1 medical device for the treatment of anxiety and insomnia. We are presently evaluating whether to proceed with amending our prior application with the FDA for the treatment of insomnia and anxiety or filing new applications 510(k) for our next Generation devices.

Although we have developed second- and third-Generation versions of our medical device, these have not as yet been approved by the FDA for marketing or sales in the United States. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

We may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving our business objectives. We will need to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition.

We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

We will require additional funding to meet our financial needs and to pursue our business objectives. If we are unable to raise capital when needed, we could be forced to delay, reduce or altogether cease our product development programs or commercialization efforts.19

We ~~are~~will ~~currently~~require ~~not~~additional ~~cash~~funding ~~flow~~to ~~positive~~meet ~~and~~our ~~are~~financial ~~not~~needs ~~certain when~~ and ifto wepursue ~~will~~our bebusiness ~~cash flow positive~~objectives. WeIf ~~incurred~~we aare ~~comprehensive~~unable ~~loss~~to inraise ~~the~~capital ~~amount~~when ~~of $7~~needed,~~607,290~~ ~~for~~we ~~the~~could ~~year~~be ~~ended~~forced ~~December 31, 2024. We may need~~ to ~~obtain~~delay, ~~substantial~~reduce ~~additional~~or ~~funding~~altogether incease ~~connection with~~ our ~~continuing~~product ~~operations~~development ~~and~~programs ~~planned~~or ~~activities.~~commercialization ~~Our future capital requirements will depend on many factors, including:~~efforts.

●We ~~the~~are ~~timing,~~currently ~~progress~~not cash flow positive and ~~results~~are ofnot ~~our~~certain ~~ongoing~~when ~~clinical~~and ~~trials~~if we will be cash flow positive. We incurred a net loss in the amount of approximately $8,222,000 for the year ended December 31, 2025. We will need to obtain substantial additional funding in connection with our ~~products;~~continuing operations and planned activities. Our future capital requirements will depend on many factors, including:

19● the timing, progress and results of our ongoing clinical trials of our products;

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the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials of other products that we may pursue;

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our ability to establish collaborations on favorable terms, if at all;

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the costs, timing and outcome of regulatory review of our products;

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the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our products for which we receive marketing approval;

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the revenue, if any, received from commercial sales of our products for which we receive marketing approval;

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the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and

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the costs of operating as a public company.

Identifying potential products and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to continue our regulatory approvals and achieve product sales. In addition, our products, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that are cleared under FDA review. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or altogether cease our research and development programs or future commercialization efforts.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or products.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through equity offerings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing and equity 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 marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or products or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to a third party to develop and market products that we would otherwise prefer to develop and market ourselves.

Risks Related to the Development of Our Products and Preclinical Program

We depend on the success of our future products, some of which are in clinical development but have not completed advanced clinical trials. If we ~~lose~~fail ~~our~~to ~~existing or cannot~~ obtain ~~future~~ regulatory approval for and successfully commercialize one or more of our products or if we experience significant delays in doing so, we may never become profitable.

The success of our products and preclinical program will depend on several additional factors, including:

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successful completion of preclinical studies and requisite clinical trials;

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performing preclinical studies and clinical trials in compliance with the FDA or any comparable regulatory authority requirements;

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receipt of marketing approvals from applicable regulatory authorities;

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the ability of collaborators to manufacture sufficient quantity of product for development, clinical trials or potential commercialization;

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obtaining and maintaining patent, trademark and trade secret protection, and regulatory exclusivity for our products and preclinical program;

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making arrangements with third parties for manufacturing capabilities;

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launching commercial sales of products, if and when approved, whether alone or in collaboration with others;

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acceptance of the therapies, if and when approved, by healthcare providers, physicians, clinicians, patients and third-party payors;

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competing effectively with other therapies;

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obtaining and maintaining healthcare coverage and adequate reimbursement; and

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protecting our rights in our intellectual property portfolio.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our products, which would harm our business.

Our products and product candidates may be subject to reclassification by the FDA, and a change in the classification may have an adverse impact on our revenues or our abilities to obtain necessary regulatory approvals.

Originally, our technology was cleared for the treatment of anxiety, depression and insomnia. Each treatment indication with this technology was classified as Class III from a risk tolerance standpoint at the FDA. In December of 2019, the FDA passed a new ruling that separated anxiety and insomnia from the treatment of depression. CES devices that treat anxiety and insomnia were reclassified as Class II medical devices and require special control trials to be initiated, as well as the filing of a new 510(k) application for previously approved devices. The FDA continued to classify the treatment of depression for cranial stimulation as a Class III high risk device. In order to receive approval for treatment for depression, our devices will require a new pre-market application for this indication. We have decided not to pursue a depression indication for our Gen-1 device at such time.

21Any further such reclassification by the FDA of an indication from a certain class of device to another during our development or post-commercialization for that indication could have a significant adverse impact due to the more rigorous and lengthy approval process required for a higher risk class medical device. Such a change in classification can significantly increase development costs and prolong the time for development and approval, thus delaying revenues. A reclassification of an indication after approval from a certain class of device to another could result in a change in classification for reimbursement, and therefore could have a significant negative impact on our revenues.

Any further such reclassification by the FDA of an indication from a certain class of device to another during our development or post-commercialization for that indication could have a significant adverse impact due to the more rigorous and lengthy approval process required for a higher risk class medical device. Such a change in classification can significantly increase development costs and prolong the time for development and approval, thus delaying revenues. A reclassification of an indication after approval from a certain class of device to another could result in a change in classification for reimbursement, and there could be a significant negative impact on our revenues relatedly.21

WeSuccess ~~plan~~in topreclinical ~~conduct~~studies ~~decentralized~~or clinical trials ~~for~~may ~~the~~not ~~Gen-3~~be ~~device~~indicative inof ~~the~~results ~~U.S.~~in ~~and~~future ~~have~~clinical ~~consulted the FDA as part of the pre-submission meetings~~trials.

Success in preclinical ~~studies~~testing orand early clinical trials ~~may~~does not beensure ~~indicative~~that oflater clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate. Our products may fail to show the desired safety and efficacy in ~~future~~all clinical trials.

~~Success~~If inwe ~~preclinical~~experience ~~testing~~delays ~~and~~or ~~early~~difficulties ~~clinical~~in ~~trials~~the ~~does~~enrolment ~~not~~of ~~ensure~~patients ~~that~~in ~~later~~ clinical trials, ~~will~~our ~~generate~~receipt ~~the same results or otherwise provide adequate data to demonstrate the efficacy and safety~~ of anecessary ~~product~~regulatory ~~candidate.~~approvals ~~Our~~could ~~products~~be ~~may~~delayed ~~fail~~or ~~to show the desired safety and efficacy in all clinical trials~~prevented.

IfWe wemay ~~experience~~not ~~delays~~be able to initiate, continue or ~~difficulties~~complete clinical trials of any product candidate that we develop if we and our collaborators are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the ~~enrolment~~FDA ofor other comparable regulatory authority. We have limited experience enrolling patients in our clinical trials, ~~our~~and ~~receipt~~cannot ofpredict ~~necessary~~how ~~regulatory~~successful ~~approvals~~we ~~could~~will be ~~delayed~~in orenrolling ~~prevented~~patients in future clinical trials.

WeRisks ~~may~~Related ~~not be able~~ to ~~initiate,~~Our ~~continue~~Dependence oron ~~complete~~Third clinical trials of any product candidate that we develop if we and our collaborators are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or other comparable regulatory authority. We have limited experience enrolling patients in our clinical trials and cannot predict how successful we will be in enrolling patients in future clinical trials.Parties

22We rely on third parties to conduct clinical trials for our products, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials or failing to comply with applicable regulatory requirements.

~~Risks~~We ~~Related~~rely on third parties, such as research institutions and Wider, which is based in China, to conduct some of our clinical trials. Our ~~Dependence~~reliance upon research institutions, including hospitals, clinics and academics, provides us with less control over the timing and cost of clinical trials and the ability to recruit subjects. If we are unable to reach agreement with suitable research institutions on ~~Third~~acceptable ~~Parties~~terms, or if any resulting agreement is terminated, we may be unable to quickly replace the research institution with another qualified institution on acceptable terms. Even if we do replace the institution, we may incur additional costs to conduct the trial at the new institution. We may not be able to secure and maintain suitable research institutions to conduct our clinical trials.

We rely on ~~third~~a ~~parties~~collaboration towith ~~conduct~~a third party for the ~~clinical~~quality ~~trials~~assurance ~~for~~of our products, and ~~those~~we ~~third parties~~ may ~~not~~seek ~~perform~~additional ~~satisfactorily,~~collaborations ~~including~~in ~~failing~~the tofuture. ~~meet~~If ~~deadlines~~those ~~for~~collaborations ~~the~~are ~~completion~~not ofsuccessful, ~~such~~we ~~trials~~may ornot ~~failing~~be able to ~~comply~~capitalize ~~with~~on ~~applicable~~the ~~regulatory~~market ~~requirements~~potential of these products.

We ~~rely~~are ona ~~third~~party ~~parties,~~to ~~such~~a asquality ~~research~~assurance ~~institutions~~agreement ~~and~~with ~~Wider,~~a ~~which~~third isparty ~~based~~for inthe ~~China,~~quality toassurance ~~conduct some~~ of our ~~clinical~~products ~~trials~~and may enter into additional collaborations in the future. ~~Our~~We ~~reliance~~are dependent upon ~~research~~the ~~institutions,~~success ~~including~~of ~~hospitals,~~our ~~clinics~~current and ~~academics,~~any ~~provides~~future uscollaborators ~~with~~in ~~less~~performing ~~control~~their ~~over~~responsibilities in connection with the ~~timing~~relevant ~~and~~collaboration. ~~cost~~If ofwe ~~clinical~~fail ~~trials~~to ~~and~~maintain ~~the~~these ~~ability~~collaborative torelationships ~~recruit~~for ~~subjects.~~any Ifreason, we ~~are~~will ~~unable~~need to ~~reach~~perform ~~agreement~~the ~~with~~activities ~~suitable~~that ~~research~~we ~~institutions~~currently anticipate would be performed by our collaborators on ~~acceptable~~our ~~terms,~~own orat ifour ~~any~~sole ~~resulting~~expense. ~~agreement~~This iscould ~~terminated~~substantially increase our capital needs, and we may benot ~~unable~~have the capability or financial capacity to ~~quickly~~undertake ~~replace~~these ~~the~~activities ~~research~~on ~~institution~~our ~~with~~own, ~~another~~or ~~qualified~~we ~~institution~~may not be able to find other collaborators on acceptable terms., ~~Even~~or ifat weall. doThis ~~replace~~may limit the ~~institution,~~programs we ~~may~~are ~~incur~~able ~~additional~~to ~~costs~~pursue toand ~~conduct~~result ~~the~~in ~~trial~~significant atdelays in the ~~new~~development, ~~institution.~~sale Weand ~~may~~manufacture ~~not~~of beour ~~able~~product tocandidates ~~secure~~and products, and ~~maintain~~may ~~suitable~~have ~~research~~a ~~institutions~~material toadverse ~~conduct~~effect on our ~~clinical~~business, ~~trials~~financial condition and results of operations.

WeOur ~~rely~~dependence onupon aour ~~collaboration~~current ~~with~~and apotential ~~third~~future ~~party~~collaborations ~~for~~exposes ~~the~~us ~~quality~~to ~~assurance~~a number of ~~our products~~risks, ~~and~~including wethat ~~may~~our ~~seek~~collaborators ~~additional~~(i) ~~collaborations~~may infail ~~the~~to ~~future.~~cooperate Ifor ~~those~~perform ~~collaborations~~their ~~are~~contractual ~~not~~obligations, ~~successful~~including financial obligations, we(ii) may ~~not~~choose beto ~~able~~undertake todiffering ~~capitalize~~business onstrategies ~~the~~or ~~market~~pursue ~~potential~~alternative technologies or (iii) may take an opposing view regarding ownership of ~~these~~clinical ~~products~~trial results or intellectual property.

WeDue ~~are a party~~ to athese ~~quality~~factors ~~assurance~~and ~~agreement~~other ~~with~~possible aevents, ~~third~~we ~~party~~could ~~for~~suffer ~~the~~delays ~~quality assurance of our products and may enter into additional collaborations~~ in the ~~future.~~research, Wedevelopment ~~are~~or ~~dependent~~commercialization ~~upon the success~~ of our ~~current~~product candidates and ~~any~~ future ~~collaborators~~products inor ~~performing their responsibilities in connection with the relevant collaboration. If~~ we ~~fail~~may tobecome ~~maintain~~involved ~~these~~in ~~collaborative~~litigation ~~relationships~~or ~~for any reason~~arbitration, wewhich ~~will~~could ~~need to perform the activities that we currently anticipate would~~ be ~~performed~~time byconsuming ~~our~~and ~~collaborators on our own at our sole expense~~expensive. ~~This~~We ~~could~~additionally ~~substantially increase our capital needs, and we~~ may ~~not~~be ~~have~~compelled ~~the capability or financial capacity~~ to ~~undertake~~split ~~these~~revenue ~~activities~~with on our ~~own, or we may not be able to find other~~ collaborators ~~on acceptable terms~~, orwhich atcould ~~all. This may limit the programs we are able to pursue and result in significant delays in the development, sale and manufacture of our product candidates and products, and may~~ have a material adverse effect on our business, financial condition, and results of operations.

Our dependence upon our current and potential future collaborations exposes us to a number of risks, including that our collaborators (i) may fail to cooperate or perform their contractual obligations, including financial obligations, (ii) may choose to undertake differing business strategies or pursue alternative technologies or (iii) may take an opposing view regarding ownership of clinical trial results or intellectual property.22

~~Due~~Risks Related to ~~these factors and other possible events, we could suffer delays in~~ the ~~research,~~Commercialization ~~development or commercialization~~ of ~~our~~Our product candidates and future products or we may become involved in litigation or arbitration, which could be time consuming and expensive. We additionally may be compelled to split revenue with our collaborators, which could have a material adverse effect on our business, financial condition, and results of operations.Products

23Even if any of our products receives marketing approval, it may fail to achieve the degree of market acceptance by healthcare providers, physicians, clinicians, patients, third-party payors and others in the medical community necessary for commercial success.

~~Risks~~The ~~Related~~degree toof ~~the~~market ~~Commercialization~~acceptance of ~~Our~~our ~~Products~~products, if approved for commercial sale, will depend on a number of factors, including:

~~Even~~● ~~if any of our products receives marketing approval, it may fail to achieve~~ the ~~degree~~efficacy ~~of market acceptance by healthcare providers, physicians, clinicians, patients, third-party payors~~ and ~~others~~potential inadvantages ~~the~~compared ~~medical~~to ~~community~~alternative ~~necessary for commercial success.~~treatments;

~~The~~● ~~degree~~the ofpotential ~~market~~and ~~acceptance~~perceived ofadvantages ~~our~~and ~~products,~~disadvantages ifof ~~approved~~the ~~for commercial sale~~products, ~~will~~including ~~depend~~cost onand aclinical ~~number~~benefit ofrelative ~~factors,~~to ~~including:~~alternative treatments;

● the ~~efficacy~~convenience and ~~potential~~ease ~~advantages~~of administration compared to alternative treatments;

● the ~~potential~~willingness ~~and~~of ~~perceived~~the ~~advantages~~target ~~and~~patient ~~disadvantages~~population ofto ~~the~~try ~~products,~~new ~~including~~therapies ~~cost~~ and ~~clinical~~of ~~benefit~~healthcare ~~relative~~providers, physicians, and clinicians to ~~alternative~~prescribe ~~treatments~~these therapies;

● ~~the~~acceptance ~~convenience~~by ~~and~~healthcare ~~ease~~providers, physicians, clinicians, patients, operators of ~~administration~~hospitals, ~~compared~~including toin-hospital ~~alternative~~formularies, ~~treatments~~and treatment facilities and parties responsible for coverage and reimbursement of the product;

● the ~~willingness~~availability of ~~the~~coverage ~~target~~and ~~patient~~adequate ~~population~~reimbursement toby ~~try~~third-party ~~new~~payors ~~therapies~~ and ofgovernment ~~healthcare providers, physicians, and clinicians to prescribe these therapies~~authorities;

● ~~acceptance~~the byability ~~healthcare~~to ~~providers,~~manufacture ~~physicians,~~our ~~clinicians,~~product ~~patients, operators of hospitals, including~~ in~~-hospital~~ ~~formularies,~~sufficient ~~and~~quantities ~~treatment facilities~~ and ~~parties responsible for coverage and reimbursement of the product~~yields;

● the ~~availability~~strength ~~of coverage~~ and ~~adequate~~effectiveness ~~reimbursement~~of bymarketing ~~third-party payors~~ and ~~government~~distribution ~~authorities~~support;

● the ~~ability~~prevalence toand ~~manufacture~~severity ~~our~~of ~~product~~any inside ~~sufficient quantities and yields~~effects;

● ~~the~~limitations ~~strength~~or ~~and~~warnings, ~~effectiveness~~including ofdistribution ~~marketing~~or ~~and~~use ~~distribution~~restrictions, ~~support~~contained in the product’s approved labelling;

● the ~~prevalence~~approval ~~and~~of ~~severity~~other ofnew ~~any~~products ~~side~~for ~~effects~~the same indications; and

● ~~limitations~~the ortiming ~~warnings,~~of ~~including~~market ~~distribution~~introduction orof ~~use~~the ~~restrictions,~~approved ~~contained~~product inas ~~the~~well ~~product’s~~as ~~approved~~competitive ~~labelling;~~products.

●Any ~~the~~failure ~~approval~~by any of ~~other~~our ~~new~~existing or future products ~~for~~that ~~the~~obtain ~~same~~regulatory ~~indications;~~approval ~~and~~to achieve market acceptance or commercial success would have a material adverse effect on our business prospects.

●We ~~the~~may ~~timing~~eventually ofcompete ~~market~~for ~~introduction~~product sales with other companies, many of ~~the~~which ~~approved~~will ~~product~~have asgreater ~~well~~resources asor ~~competitive~~capabilities than we have or may succeed in developing better products or in developing products more quickly than we do, and we may not compete successfully with them.

~~Any~~Our ~~failure~~industry byis ~~any~~competitive ofand ~~our~~has been evolving rapidly with not only existing ortreatment ~~future~~options, ~~products~~but ~~that~~also ~~obtain~~the ~~regulatory~~introduction ~~approval~~of tonew ~~achieve~~technologies and products as well as the market ~~acceptance~~activities of industry participants. We compete or ~~commercial~~may ~~success~~eventually ~~would~~compete ~~have~~with aother ~~material~~companies ~~adverse~~and ~~effect~~organizations onthat are marketing or developing therapies for our ~~business~~targeted ~~prospects~~disease indications, based on traditional pharmaceutical, medical device, or other neurostimulation therapy and technologies.

We may eventually compete for product sales with other companies, many of which will have greater resources or capabilities than we have or may succeed in developing better products or in developing products more quickly than we do, and we may not compete successfully with them.23

~~Our~~We ~~industry~~also isface ~~competitive~~competition ~~and~~in ~~has~~the ~~been~~neurostimulation ~~evolving~~field ~~rapidly~~from ~~with~~academic ~~not~~institutions ~~only~~and ~~existing~~governmental ~~treatment~~agencies. ~~options,~~Many ~~but also the introduction~~ of ~~new~~our ~~technologies~~current and ~~products~~potential ascompetitors ~~well~~have asgreater ~~the~~financial ~~market~~and ~~activities~~human ofresources ~~industry~~than ~~participants.~~we Wehave, ~~compete~~including ormore ~~may~~experience ~~eventually~~in ~~compete~~research ~~with~~and ~~other~~development ~~companies~~ and ~~organizations~~more ~~that~~established ~~are~~sales, marketing ~~or developing therapies for our targeted disease indications, based on traditional pharmaceutical, medical device, or other neurostimulation therapy~~ and ~~technologies~~distribution capabilities.

24We anticipate that competition in our industry will increase. In addition, the health care industry is characterized by rapid technological change, resulting in new product introductions and other technological advancements. Our competitors may develop and market products that render product candidates now or under development by us in the future, or any products manufactured or marketed by us, non-competitive or otherwise obsolete.

WeCoverage ~~also~~and ~~face~~adequate ~~competition~~reimbursement inmay ~~the~~not ~~neurostimulation~~be ~~field~~available ~~from~~for ~~academic institutions and governmental agencies. Many of~~ our current ~~and~~or ~~potential~~future ~~competitors have greater financial and human resources than we have~~products, ~~including~~which ~~more~~could ~~experience~~make init ~~research~~difficult ~~and~~for ~~development~~us ~~and~~to ~~more~~sell ~~established sales~~profitably, ~~marketing~~if ~~and distribution capabilities~~approved.

WeMarket ~~anticipate~~acceptance and sales of any products that ~~competition~~we commercialize, if approved, will depend in ~~our~~part ~~industry~~on the extent to which reimbursement for these products and related treatments will ~~increase.~~be Inavailable ~~addition~~from third-party payors, ~~the~~including government health administration authorities, managed care ~~industry~~organizations isand ~~characterized~~other byprivate ~~rapid~~health ~~technological~~insurers. ~~change,~~Third-party ~~resulting~~payors indecide ~~new~~which ~~product~~therapies ~~introductions~~they will pay for and ~~other~~establish ~~technological~~reimbursement ~~advancements~~levels. ~~Our~~Third-party ~~competitors~~payors ~~may~~often ~~develop~~rely upon Medicare coverage policy and ~~market~~payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any products that ~~render~~we ~~product~~develop ~~candidates~~will ~~now~~be ormade ~~under~~on ~~development~~a payor-by-payor usbasis. inOne payor’s determination to provide coverage for a product does not ensure that other payors will also provide coverage and adequate reimbursement for the ~~future~~product. Additionally, ora ~~any~~third-party ~~products~~payor’s ~~manufactured~~decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be approved. Each payor determines whether it will provide coverage for a therapy, what amount it will pay for the therapy and on what tier of its list of covered products, or ~~marketed~~formulary, it will be placed. The position on a payor’s formulary generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such therapy by ~~us,~~patients ~~non~~and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-~~competitive~~party payors to reimburse all or ~~otherwise~~part ~~obsolete~~of the associated healthcare costs. Patients are unlikely to use our products, and providers are unlikely to prescribe our products, unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost of our products and their administration.

~~Coverage~~A primary trend in the U.S. healthcare industry and ~~adequate~~elsewhere is cost containment. Third-party payors have attempted to control costs by limiting coverage and limiting reimbursement ~~may~~for ~~not~~medications and certain treatments utilizing digital technologies. We cannot be sure that coverage and reimbursement will be available for ~~our~~any ~~current~~product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage or ~~any~~reimbursement ~~future~~may ~~products~~impact the demand for, ~~which~~or ~~could~~the ~~make~~price itof, ~~difficult~~any product for uswhich we obtain marketing approval. If adequate coverage or reimbursement is not available, or are available only to ~~sell~~limited ~~profitably~~levels, ifwe ~~approved~~may not be able to successfully commercialize our current and any future products that we develop.

~~Market~~Product ~~acceptance~~liability ~~and~~lawsuits ~~sales~~against ofus ~~any~~could ~~products~~cause ~~that~~us ~~we commercialize, if approved, will depend in part on the extent~~ to ~~which~~incur ~~reimbursement~~substantial ~~for~~liabilities ~~these products~~ and ~~related~~to ~~treatments~~limit ~~will~~commercialization be available from third-party payors, including government health administration authorities, managed care organizations and other private health insurers. Third-party payors decide which therapies they will pay for and establish reimbursement levels. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of ~~coverage and amount of reimbursement to be provided for~~ any products that we ~~develop~~may ~~will be made on a payor-by-payor basis~~develop. One payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage and adequate reimbursement for the product. Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be approved. Each payor determines whether it will provide coverage for a therapy, what amount it will pay for the therapy and on what tier of its list of covered products, or formulary, it will be placed. The position on a payor’s formulary generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products, and providers are unlikely to prescribe our products, unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost of our products and their administration.

AWe ~~primary~~face ~~trend~~an ininherent ~~the~~risk ~~U.S.~~of ~~healthcare~~product ~~industry~~liability ~~and~~exposure ~~elsewhere~~related ~~is cost containment. Third-party payors have attempted~~ to ~~control~~the ~~costs~~testing byof ~~limiting~~our ~~coverage~~products ~~and~~in ~~limited~~human ~~reimbursement~~clinical ~~for~~trials ~~medications~~ and ~~certain~~will ~~treatments~~face ~~utilizing~~an ~~digital~~even ~~technologies.~~greater Werisk ~~cannot~~if bewe ~~sure~~commercially ~~that~~sell ~~coverage and reimbursement will be available for~~ any ~~product~~products that we ~~commercialize~~may ~~and,~~develop. ifIf ~~reimbursement~~we iscannot ~~available,~~successfully ~~what~~defend ~~the~~ourselves ~~level~~against ofclaims ~~reimbursement~~that ~~will~~our ~~be.~~products ~~Inadequate coverage and reimbursement may impact the demand for,~~ or ~~the~~products ~~price~~caused ofinjuries, ~~any product for which~~ we ~~obtain~~will ~~marketing~~incur ~~approval~~substantial liabilities. IfRegardless ~~coverage~~of ~~and~~merit ~~adequate reimbursement are not available,~~ or ~~are~~eventual ~~available only to limited levels~~outcome, weliability claims may ~~not~~result ~~be able to successfully commercialize our current and any future products that we develop.~~in:

~~Product~~● ~~liability~~reduced ~~lawsuits~~resources ~~against~~of usour ~~could~~management ~~cause us~~ to ~~incur~~pursue ~~substantial~~our ~~liabilities~~business ~~and to limit commercialization of any products that we may develop.~~strategy;

We● ~~face~~decreased andemand ~~inherent~~for ~~risk of product liability exposure related to the testing of our products in human clinical trials and will face an even greater risk if we commercially sell~~ any products ~~that we may develop. If we cannot successfully defend ourselves against claims that our products~~ or products ~~caused~~that ~~injuries,~~ we ~~will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims~~ may ~~result in:~~develop;

● ~~reduced~~injury ~~resources~~to of our ~~management~~reputation toand ~~pursue~~significant ~~our~~negative ~~business~~media ~~strategy~~attention;

~~● decreased demand for any products or products that we may develop;~~24

25● withdrawal of clinical trial participants;

● ~~injury~~initiation toof ~~our~~investigations ~~reputation~~by ~~and significant negative media attention~~regulators;

● ~~withdrawal~~product ofrecalls, ~~clinical~~withdrawals ~~trial~~or ~~participants~~labelling, marketing or promotional restrictions;

● ~~initiation~~significant ofcosts ~~investigations~~to bydefend ~~regulators~~the resulting litigation;

● ~~product~~substantial ~~recalls,~~monetary ~~withdrawals~~awards orpaid ~~labelling,~~to ~~marketing~~clinical ortrial ~~promotional~~participants ~~restrictions~~or patients;

● ~~significant~~loss ~~costs~~of ~~to defend the resulting litigation~~revenue; and

● ~~substantial~~the ~~monetary~~inability ~~awards~~to ~~paid~~commercialize toany ~~clinical~~products ~~trial~~that ~~participants~~we ormay ~~patients;~~develop.

●We ~~loss~~currently hold $2 million in product liability insurance coverage in the aggregate, with a per incident limit of ~~revenue;~~$2 ~~and~~million, which may not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our products. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

●Risks ~~the~~Related ~~inability~~ to ~~commercialize~~Our ~~any~~Business ~~products~~and ~~that~~Managing weOur ~~may develop.~~Growth

WeOur ~~currently~~future ~~hold~~success $1depends ~~million~~on ~~in product liability insurance coverage in the aggregate, with a per incident limit of $1 million, which may not be adequate to cover all liabilities that we may incur. We may need to increase~~ our ~~insurance~~ability ~~coverage as we expand our clinical trials or if we commence commercialization of our products. Insurance coverage is increasingly expensive. We may not be able~~ to ~~maintain~~retain ~~insurance~~key ~~coverage~~executives atand ~~a reasonable cost or in an amount adequate~~ to ~~satisfy~~attract, ~~any~~retain ~~liability~~and ~~that~~motivate ~~may~~qualified ~~arise~~personnel.

26Recruiting and retaining qualified scientific and clinical personnel and, if we progress the development of any of our products, commercialization, manufacturing and sales and marketing personnel, will be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize our products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited.

~~Risks~~We ~~Related~~expect to ~~Our~~expand ~~Business~~our development and ~~Managing~~regulatory ~~Our~~capabilities ~~Growth~~and potentially implement sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

~~Our~~As ~~future~~of ~~success~~December 31, ~~depends~~2025, onwe had 8 full-time employees, our ~~ability~~CMO is a consultant and we utilize varying levels of other consultants, all located in the United States. As the clinical development of our products progresses, we also expect to ~~retain~~experience ~~key~~significant ~~executives~~growth in the number of our employees and the scope of our operations, particularly in the areas of research, product development and regulatory affairs, including a sales and marketing team for our existing products. To manage our anticipated future growth, we must continue to ~~attract~~implement and improve our managerial, ~~retain~~operational and ~~motivate~~financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Recruiting and retaining qualified scientific and clinical personnel and, if we progress the development of any of our products, commercialization, manufacturing and sales and marketing personnel, will be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize our products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited.25

WeSignificant ~~expect~~disruptions toof ~~expand~~ our ~~development~~information ~~and~~technology ~~regulatory~~systems ~~capabilities~~or ~~and~~data ~~potentially~~security ~~implement~~incidents ~~sales,~~could ~~marketing~~result ~~and~~in ~~distribution~~significant ~~capabilities~~financial, ~~and as a result~~legal, ~~we may encounter difficulties in managing our growth~~regulatory, ~~which~~business ~~could~~and ~~disrupt~~reputational ~~our~~harm ~~operations~~to us.

AsWe ofare ~~December 31~~increasingly dependent on information technology systems and infrastructure, ~~2024~~including mobile technologies, weto ~~had~~operate 6our ~~full-time~~business. ~~employees~~In the ordinary course of our business, 1we ~~part-time~~collect, ~~employee~~store, process and 7transmit ~~consultants~~large amounts of sensitive information, ~~all~~including ~~located~~intellectual inproperty, ~~the~~proprietary ~~United~~business ~~States.~~information, Aspersonal ~~the~~information ~~clinical~~and ~~development~~other ofconfidential ~~our~~information. ~~products~~It ~~progresses,~~is critical that we ~~also~~do ~~expect~~so toin ~~experience~~a ~~significant~~secure ~~growth~~manner into maintain the ~~number~~confidentiality, integrity and availability of ~~our~~such ~~employees~~sensitive ~~and~~information. ~~the~~We ~~scope~~have also outsourced elements of our operations, ~~particularly~~including inelements ~~the~~of ~~areas~~our ofinformation ~~research~~technology infrastructure, ~~product~~to ~~development~~third parties and, ~~regulatory~~as ~~affairs~~a result, ~~including~~we manage a ~~sales~~number ~~and~~of ~~marketing~~third-party ~~team~~vendors ~~for~~who ~~our~~may ~~existing~~or ~~products.~~could Tohave ~~manage~~access to our ~~anticipated~~computer ~~future~~networks ~~growth~~or our confidential information. In addition, wemany ~~must~~of ~~continue~~those third parties in turn subcontract or outsource some of their responsibilities to ~~implement~~other third parties. While all information technology operations are inherently vulnerable to inadvertent or intentional security breaches, incidents, attacks and ~~improve~~exposures, the accessibility and distributed nature of our ~~managerial,~~information ~~operational~~technology systems, and ~~financial~~the sensitive information stored on those systems, ~~expand~~make ~~our~~such ~~facilities~~systems ~~and~~potentially ~~continue~~vulnerable to ~~recruit~~unintentional or malicious, internal and ~~train~~external ~~additional~~attacks ~~qualified~~on ~~personnel~~our technology environment. ~~Due~~Potential tovulnerabilities ~~our~~can ~~limited~~be ~~financial~~exploited ~~resources~~from ~~and~~inadvertent ~~the~~or ~~limited~~intentional ~~experience~~actions of our ~~management~~employees, ~~team~~third-party vendors, or business partners or by malicious third parties. Attacks of this nature are increasing in ~~managing~~their afrequency, ~~company~~levels ~~with~~of ~~such~~persistence, ~~anticipated~~sophistication ~~growth~~and intensity, weand ~~may~~are ~~not~~being beconducted ~~able~~by tosophisticated ~~effectively~~and ~~manage~~organized ~~the~~groups ~~expansion~~and individuals with a wide range of ~~our~~motives ~~operations~~(including orindustrial ~~recruit~~espionage) and ~~train~~expertise, ~~additional~~including ~~qualified~~organized ~~personnel~~criminal groups, “hacktivists,” nation states and others. ~~The~~In ~~expansion~~addition to the extraction of ~~our~~sensitive ~~operations~~information, ~~may~~such ~~lead~~attacks tocould ~~significant~~include ~~costs~~the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and ~~may~~other ~~divert~~means ~~our~~to ~~management~~affect service reliability and ~~business~~threaten ~~development~~the ~~resources.~~confidentiality, ~~Any~~integrity ~~inability~~and toavailability ~~manage~~of ~~growth~~information. ~~could~~In ~~delay~~addition, the ~~execution~~prevalent use of ~~our~~mobile ~~business~~devices ~~plans~~increases orthe ~~disrupt~~risk ~~our~~of ~~operations~~data security incidents.

Significant disruptions of our third-party vendors’ information technology systems or other similar data security incidents could adversely affect our business operations and result in ~~significant~~the loss, misappropriation and unauthorized access, use or disclosure of, or the prevention of access to, sensitive information, which could result in financial, legal, regulatory, business and reputational harm to us. In addition, information technology system disruptions, whether from attacks on our technological environment or from computer viruses, natural disasters, terrorism, war or telecommunication and electrical failures, could result in a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

WeThere ~~are~~is ~~increasingly~~no ~~dependent~~way onof ~~information~~knowing ~~technology~~with ~~systems~~certainty ~~and~~whether ~~infrastructure,~~we ~~including~~have ~~mobile~~experienced ~~technologies,~~any todata ~~operate~~security ~~our~~incidents ~~business.~~that Inhave ~~the~~not ~~ordinary~~been ~~course~~discovered. ofWhile ~~our business,~~ we ~~collect,~~have ~~store,~~no ~~process~~reason ~~and~~to ~~transmit~~believe ~~large~~this ~~amounts~~to ofbe ~~sensitive~~the ~~information~~case, ~~including~~attackers ~~intellectual~~have ~~property,~~become ~~proprietary~~very ~~business~~sophisticated ~~information,~~in ~~personal~~the ~~information~~way ~~and~~they ~~other~~conceal ~~confidential~~access ~~information.~~to Itsystems, isand ~~critical~~many companies that wehave dobeen soattacked inare anot ~~secure~~aware ~~manner~~that tothey ~~maintain~~have ~~the~~been ~~confidentiality,~~attacked. ~~integrity~~Any ~~and~~event ~~availability~~that ofleads ~~such~~to ~~sensitive~~unauthorized ~~information.~~access, Weuse ~~have~~or ~~also~~disclosure ~~outsourced elements~~ of ~~our~~personal ~~operations~~information, including ~~elements~~personal ofinformation regarding our ~~information~~patients ~~technology~~or ~~infrastructure~~employees, tocould ~~third~~disrupt ~~parties~~our ~~and~~business, asharm aour ~~result~~reputation, wecompel ~~manage~~us ato ~~number~~comply ofwith ~~third-party~~applicable ~~vendors~~federal ~~who~~and ~~may~~state orbreach ~~could~~notification ~~have~~laws ~~access~~and toforeign ~~our~~law ~~computer~~equivalents, ~~networks~~subject orus ~~our~~to ~~confidential information. In addition~~time-consuming, ~~many~~distracting ofand ~~those~~expensive ~~third~~litigation, ~~parties~~regulatory ininvestigation ~~turn~~and ~~subcontract~~oversight or ~~outsource~~mandatory ~~some~~corrective ofaction, ~~their~~require ~~responsibilities~~us to ~~other~~verify ~~third~~the ~~parties.~~correctness ~~While~~of ~~all~~database ~~information~~contents ~~technology~~or ~~operations~~otherwise ~~are~~subject ~~inherently~~us ~~vulnerable~~ to ~~inadvertent~~liability orunder ~~intentional~~laws, ~~security~~regulations ~~breaches,~~and ~~incidents~~contractual obligations, ~~attacks~~including ~~and~~those ~~exposures,~~that protect the ~~accessibility~~privacy and ~~distributed~~security ~~nature~~ of ~~our~~personal information. ~~technology~~This ~~systems~~could result in increased costs to us, and ~~the~~result ~~sensitive~~in ~~information~~significant ~~stored~~legal onand ~~those~~financial ~~systems,~~exposure ~~make~~and ~~such~~reputational ~~systems~~harm. ~~potentially~~In ~~vulnerable~~addition, toany ~~unintentional~~failure or ~~malicious,~~perceived ~~internal~~failure ~~and~~by ~~external~~us ~~attacks~~or on our ~~technology~~vendors ~~environment.~~or ~~Potential~~business ~~vulnerabilities~~partners ~~can~~to becomply ~~exploited~~with ~~from~~our ~~inadvertent~~privacy, confidentiality or ~~intentional~~data ~~actions~~security-related oflegal ~~our~~or ~~employees,~~other obligations to third~~-party~~ ~~vendors~~parties, or ~~business~~any ~~partners~~further orsecurity byincidents ~~malicious~~or ~~third~~other ~~parties.~~inappropriate ~~Attacks~~access ofevents ~~this~~that ~~nature~~result ~~are increasing~~ in ~~their~~the ~~frequency~~unauthorized access, ~~levels~~release or transfer of ~~persistence~~sensitive information, ~~sophistication~~which ~~and~~could ~~intensity~~include personally identifiable information, ~~and~~may ~~are~~result ~~being~~in ~~conducted~~governmental byinvestigations, ~~sophisticated~~enforcement ~~and~~actions, ~~organized~~regulatory ~~groups~~fines, ~~and~~litigation ~~individuals~~or ~~with~~public astatements ~~wide~~against ~~range~~us ofby ~~motives~~advocacy ~~(including~~groups ~~industrial~~or ~~espionage)~~others, and ~~expertise~~could cause third parties, including ~~organized~~clinical ~~criminal groups~~sites, ~~“hacktivists,”~~regulators ~~nation~~or ~~states~~current and ~~others.~~potential Inpartners, ~~addition~~ to ~~the~~lose ~~extraction~~trust ofin ~~sensitive information~~us, ~~such~~or ~~attacks~~we could ~~include~~be ~~the~~subject ~~deployment~~to ofclaims ~~harmful~~by ~~malware,~~third ~~ransomware,~~parties ~~denial~~that we have breached our privacy-of or confidentiality-~~service~~related ~~attacks~~obligations. Moreover, ~~social~~data ~~engineering~~security incidents and other ~~means~~inappropriate toaccess ~~affect~~can ~~service~~be ~~reliability~~difficult to detect, and ~~threaten~~any ~~the~~delay ~~confidentiality,~~in ~~integrity~~identifying ~~and~~them ~~availability~~may lead to increased harm of ~~information~~the type described above. InWhile ~~addition~~we have implemented security measures intended to protect our information technology systems and infrastructure, ~~the~~there ~~prevalent~~can ~~use~~be ofno ~~mobile~~assurance ~~devices~~that ~~increases~~such ~~the~~measures ~~risk~~will ofsuccessfully ~~data~~prevent service interruptions or security incidents.

2726

~~Significant~~If ~~disruptions~~we ofengage ~~our third-party vendors’ information technology systems or other similar data security incidents could adversely affect our business operations and result~~ in ~~the~~future ~~loss,~~acquisitions ~~misappropriation and unauthorized access, use~~ or ~~disclosure~~strategic ofcollaborations, orthis ~~the~~may ~~prevention~~increase of access to, sensitive information, which could result in financial, legal, regulatory, business and reputational harm to us. In addition, information technology system disruptions, whether from attacks on our ~~technology~~capital ~~environment or from computer viruses~~requirements, ~~natural~~dilute ~~disasters, terrorism, war or telecommunication and electrical failures, could result in a material disruption of~~ our ~~development programs and our business operations. For example~~stockholders, ~~the~~cause ~~loss~~us ofto ~~clinical~~incur ~~trial~~debt ~~data from completed~~ or ~~future~~assume ~~clinical~~contingent ~~trials~~liabilities ~~could result in delays in our regulatory approval efforts~~ and ~~significantly~~subject ~~increase~~us ~~our costs~~ to ~~recover~~other ~~or reproduce the data~~risks.

~~There~~From istime ~~no way of knowing with certainty whether we have experienced any data security incidents that have not been discovered. While we have no reason~~ to ~~believe this to be the case~~time, ~~attackers~~we ~~have~~may ~~become~~evaluate ~~very~~various ~~sophisticated~~acquisitions ~~in the way they conceal access to systems,~~ and ~~many~~strategic ~~companies that have been attacked are not aware that they have been attacked. Any event that leads to unauthorized access~~collaborations, ~~use or disclosure of personal information,~~ including ~~personal~~licensing ~~information regarding our patients~~ or ~~employees,~~acquiring ~~could~~intellectual ~~disrupt~~property ~~our business~~rights, ~~harm~~technologies our reputation, compel us to comply with applicable federal and state breach notification laws and foreign law equivalents, subject us to time-consuming, distracting and expensive litigation, regulatory investigation and oversight or ~~mandatory corrective action~~businesses, ~~require~~as usdeemed toappropriate ~~verify the correctness of database contents or otherwise subject us~~ to ~~liability~~carry ~~under~~out laws, regulations and contractual obligations, including those that protect the privacy and security of personal information. This could result in increased costs to us, and result in significant legal and financial exposure and reputational harm. In addition, any failure or perceived failure by us or our ~~vendors or~~ business ~~partners~~plan. toAny comply with our privacy, confidentiality or data security-related legal or other obligations to third parties, or any further security incidents or other inappropriate access events that result in the unauthorized access, release or transfer of sensitive information, which could include personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us by advocacy groups or others, and could cause third parties, including clinical sites, regulators or current and potential ~~partners,~~acquisition ~~to lose trust in us,~~ or westrategic ~~could~~collaboration be subject to claims by third parties that we have breached our privacy- or confidentiality-related obligations. Moreover, data security incidents and other inappropriate access can be difficult to detect, and any delay in identifying them may ~~lead~~entail tonumerous ~~increased harm of the type described above. While we have implemented security measures intended to protect our information technology systems and infrastructure~~risks, ~~there can be no assurance that such measures will successfully prevent service interruptions or security incidents.~~including:

If● weincreased ~~engage~~operating inexpenses ~~future acquisitions or strategic collaborations, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities~~ and ~~subject~~cash ~~us to other risks.~~requirements;

~~From~~● ~~time~~the toassumption ~~time,~~of weadditional ~~may~~indebtedness ~~evaluate various acquisitions and strategic collaborations, including licensing~~ or ~~acquiring~~contingent intellectual property rights, technologies or businesses, as deemed appropriate to carry out our business plan. Any potential acquisition or strategic collaboration may entail numerous risks, including:liabilities;

● ~~increased~~assimilation ~~operating~~of ~~expenses~~operations, intellectual property and ~~cash~~products ~~requirements~~of an acquired company, including difficulties associated with integrating new personnel;

● the ~~assumption~~diversion of ~~additional~~our ~~indebtedness~~management’s orattention ~~contingent~~from ~~liabilities~~our existing product programs and initiatives in pursuing such a strategic partnership, merger or acquisition;

● ~~assimilation~~retention of ~~operations~~key employees, ~~intellectual~~the ~~property~~loss ~~and~~of ~~products~~key ofpersonnel anand ~~acquired~~uncertainties ~~company,~~in ~~including~~our ~~difficulties~~ability ~~associated~~to ~~with~~maintain ~~integrating~~key ~~new~~business ~~personnel~~relationships;

● ~~the~~risks ~~diversion~~and ofuncertainties ~~our~~associated ~~management’s~~with ~~attention~~the ~~from~~other ~~our~~party ~~existing~~to ~~product~~such ~~programs~~a ~~and~~transaction, ~~initiatives~~including inthe ~~pursuing~~prospects ~~such~~of athat ~~strategic~~party ~~partnership,~~and ~~merger~~their existing products or ~~acquisition~~products and regulatory approvals; and

● ~~retention~~our ofinability ~~key~~to ~~employees,~~generate ~~the~~revenue ~~loss~~from ofacquired ~~key~~technology ~~personnel~~ and/or ~~uncertainties~~products insufficient to meet our ~~ability~~objectives in undertaking the acquisition or even to ~~maintain~~offset ~~key~~the ~~business~~associated ~~relationships;~~acquisition and maintenance costs.

28We are subject to the risks of conducting business internationally.

●The ~~risks~~global tensions resulting from the Russia-Ukraine conflict and ~~uncertainties~~the ~~associated~~conflict ~~with~~in Israel, Iran, the Gaza Strip, and other ~~party~~parts toof ~~such~~the aMiddle ~~transaction,~~East ~~including~~have increased supply interruptions throughout the ~~prospects~~world ofand ~~that~~in ~~party~~the United States and ~~their~~may ~~existing~~hinder ~~products~~our orability to find the materials we need to make our products. Although, to date, there has been minimal effect upon our business, supply disruptions could make it harder for us to find favorable pricing and ~~regulatory~~reliable ~~approvals;~~sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to make certain products.

●Risks ~~our~~Related ~~inability~~ to ~~generate~~Doing ~~revenue~~Business ~~from acquired technology and/or products sufficient to meet our objectives~~ in ~~undertaking the acquisition or even to offset the associated acquisition and maintenance costs.~~China

WeThe medical industry in China is highly regulated and such regulations are subject to ~~the~~change ~~risks~~which ofmay ~~conducting~~affect ~~business~~approval ~~internationally~~and commercialization of our products.

~~The~~A ~~global~~portion ~~tensions~~of ~~resulting~~our ~~from~~research is conducted in China through the ~~Russia-Ukraine~~Joint ~~conflict~~Venture, We believe the Joint Venture will confers clinical, commercial and regulatory advantages, but may subject the ~~conflict~~Joint Venture and us to significant regulatory, liquidity, and enforcement risks. The medical industry in ~~Israel~~China is subject to comprehensive government regulation and supervision, encompassing the ~~Gaza~~approval, ~~Strip~~registration, ~~have~~manufacturing, ~~increased~~packaging, ~~supply~~licensing ~~interruptions~~and ~~throughout~~marketing of new drugs. In recent years, the ~~world~~regulatory ~~and~~framework in China regarding the ~~United~~medical ~~States~~industry has undergone significant changes, and we expect that it will continue to undergo significant changes. Any such changes or amendments may ~~hinder~~result in increased compliance costs on our ~~ability~~business toor ~~find~~cause delays in or prevent the ~~materials~~successful development or commercialization of our products in China and reduce the current benefits we ~~need~~believe are available to ~~make~~us from researching our products in China. ~~Although,~~The toPRC ~~date,~~authorities ~~there~~have ~~has~~become ~~been~~increasingly ~~minimal~~vigilant ~~effect~~in ~~upon~~enforcing ~~our~~laws ~~business,~~in ~~supply~~the ~~disruptions~~medical ~~could~~industry ~~make~~and itany ~~harder~~failure ~~for~~by us or our partners to ~~find~~maintain ~~favorable~~compliance ~~pricing~~with applicable laws and ~~reliable~~regulations ~~sources~~or ~~for~~obtain and maintain required licenses and permits may result in the ~~materials~~suspension weor ~~need,~~termination ~~putting~~of ~~upward~~our ~~pressure~~business onactivities in China. We believe our ~~costs~~strategy and ~~increasing~~approach are aligned with the ~~risk~~PRC ~~that~~government’s regulatory policies, but we ~~may~~cannot beensure ~~unable~~that our strategy and approach will continue to ~~acquire~~be aligned. In the ~~materials~~event ~~and~~that ~~services~~there are changes, we ~~need~~and tothe ~~continue~~Joint Venture will take any and all actions to ~~make~~remain ~~certain~~in ~~products~~compliance with any such laws or regulations or detailed implementations and interpretations thereof.

2927

~~Risks~~There ~~Related~~may tobe ~~Doing~~difficulties ~~Business~~in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us based on foreign laws.

~~The~~We ~~medical~~are ~~industry~~conducting our research in China through the Joint Venture. The Joint Venture is ~~highly~~physically ~~regulated~~located in and ~~such~~was ~~regulations~~formed ~~are~~under ~~subject~~the laws of Hong Kong. Our joint venture partner, Wider, is located in China. As a result, it may be difficult to ~~change~~effect ~~which~~service of process upon the Joint Venture inside China. It may ~~affect~~also ~~approval~~be ~~and~~difficult ~~commercialization~~to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of ~~our~~the ~~products~~U.S. federal securities laws against the Joint Venture. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against the Joint Venture predicated upon the civil liability provisions of the securities laws of the United States or any state.

AIt ~~material~~may ~~portion~~be ofdifficult ~~our~~for ~~research~~us ~~is expected~~ to beenforce ~~conducted~~our inrights ~~China~~with ~~through~~respect to the Joint Venture,. ~~which~~The werecognition ~~believe~~and ~~confers~~enforcement ~~clinical,~~of ~~commercial~~foreign ~~and~~judgments ~~regulatory~~are ~~advantages,~~provided ~~but~~for ~~may~~under ~~subject~~ the ~~Joint~~PRC ~~Venture~~Civil ~~(and~~Procedures ~~also~~Law. ~~potentially~~PRC ~~us)~~courts tomay ~~significant~~recognize ~~regulatory, liquidity,~~ and ~~enforcement~~enforce ~~risks.~~foreign ~~The~~judgments ~~medical industry~~ in ~~China~~accordance iswith ~~subject to comprehensive government regulation and supervision, encompassing~~ the ~~approval,~~requirements ~~registration, manufacturing, packaging, licensing and marketing~~ of ~~new drugs. In recent years,~~ the ~~regulatory~~PRC ~~framework~~Civil inProcedures ~~China~~Law ~~regarding~~based ~~the~~either ~~medical~~on ~~industry~~treaties ~~has~~between ~~undergone~~China ~~significant changes,~~ and wethe ~~expect~~country ~~that~~where itthe ~~will~~judgment ~~continue~~is tomade ~~undergo significant changes. Any such changes~~ or ~~amendments may result in increased compliance costs~~ on ~~our~~principles ~~business~~of orreciprocity ~~cause~~between ~~delays~~jurisdictions. inChina ordoes ~~prevent~~not ~~the~~have ~~successful~~any ~~development~~treaties or ~~commercialization~~other forms of ~~our~~written ~~products~~arrangement inwith ~~China and reduce~~ the ~~current~~United ~~benefits~~States wethat ~~believe~~provide ~~are~~for ~~available~~the toreciprocal usrecognition ~~from~~and ~~researching~~enforcement ~~our~~of ~~products~~foreign ~~in China~~judgments. ~~The~~In ~~PRC~~addition, ~~authorities~~according ~~have~~to ~~become~~the ~~increasingly~~PRC ~~vigilant~~Civil inProcedures ~~enforcing~~Law, ~~laws~~the inPRC ~~the~~courts ~~medical~~will ~~industry~~not ~~and~~enforce ~~any~~a ~~failure~~foreign judgment by us oragainst ~~our~~Wider ~~partners to maintain compliance with applicable laws and regulations~~ or ~~obtain~~the ~~and~~Joint ~~maintain~~Venture ~~required~~if ~~licenses~~they ~~and~~decide ~~permits~~that ~~may~~the ~~result~~judgment inviolates the ~~suspension~~basic orprinciples ~~termination~~ of ~~our~~PRC ~~business~~laws ~~activities~~or innational ~~China.~~sovereignty, Wesecurity, ~~believe~~or ~~our strategy and approach are aligned with~~ the ~~PRC~~public ~~government’s regulatory policies, but we cannot ensure that our strategy and approach will continue to be aligned~~interest. InAs ~~the~~a ~~event that there are changes~~result, weit ~~and~~is ~~the~~uncertain ~~Joint~~whether ~~Venture will take any~~ and ~~all~~on ~~actions~~what tobasis ~~remain~~a inPRC ~~compliance~~court ~~with~~would ~~any~~enforce ~~such~~a ~~laws~~judgment orrendered ~~regulations~~by ora ~~detailed~~court ~~implementations~~in ~~and~~the ~~interpretations~~United ~~thereof~~States.

~~There~~The ~~may~~PRC’s beeconomic, ~~difficulties~~political inand ~~effecting~~social ~~service~~conditions, ofas ~~legal~~well ~~process~~as governmental policies, ~~enforcing~~could ~~foreign~~affect ~~judgments~~the orbusiness ~~bringing~~environment ~~actions~~and financial markets in China, ~~against~~and usour ~~based~~ability onto ~~foreign~~operate ~~laws~~our business, maintain our liquidity and keep our access to capital.

WeA ~~are~~portion ~~conducting~~of our ~~research~~operations are conducted in China through the Joint Venture. ~~Also~~Accordingly, our business, results of operations, financial condition and prospects may be influenced to a significant degree by economic, political, legal and social conditions in China. China’s economy differs from the ~~Joint~~economies ~~Venture~~of ~~was~~developed ~~formed~~countries ~~under~~in many respects, including with respect to the ~~laws~~amount of ~~Hong~~government ~~Kong~~involvement, ~~and~~level isof ~~physically~~development, ~~located~~growth inrate, ~~Hong~~control ~~Kong~~of foreign exchange and allocation of resources. ~~Our~~While ~~joint~~the ~~venture~~PRC ~~partner,~~economy ~~Wider~~has experienced significant growth over the past thirty years, isgrowth ~~located~~has inbeen uneven across different regions and among various economic sectors of China. AsThe aPRC ~~result,~~government ithas ~~may~~implemented bevarious ~~difficult~~measures to ~~effect~~encourage ~~service~~economic ofdevelopment ~~process~~and ~~upon~~guide the ~~Joint~~allocation ~~Venture~~of ~~inside China~~resources. ItSome of these measures may ~~also~~benefit bethe ~~difficult~~overall toPRC ~~enforce~~economy inbut ~~U.S.~~may ~~courts~~have ~~judgments~~a ~~obtained~~negative ineffect Uon us.S. ~~courts~~For ~~based~~example, onour ~~the~~financial ~~civil~~condition ~~liability~~and ~~provisions~~results of ~~the~~operations ~~U.S.~~may ~~federal~~be ~~securities~~adversely ~~laws~~affected ~~against~~by ~~the~~government ~~Joint~~control ~~Venture~~over capital investments or changes in tax regulations that are currently applicable to us. In addition, ~~there~~in isthe ~~uncertainty~~past asthe PRC government implemented certain measures, including interest rate increases, to ~~whether~~control the ~~courts~~pace of ~~the~~economic ~~PRC~~growth. ~~would~~These ~~recognize~~measures ormay ~~enforce~~cause ~~judgments~~decreased economic activity in China, which may adversely affect our business and results of Uoperation.S. ~~courts~~More ~~against~~generally, if the ~~Joint~~business ~~Venture~~environment ~~predicated~~in ~~upon~~China ~~the~~deteriorates ~~civil~~from ~~liability~~the ~~provisions~~perspective of ~~the~~domestic ~~securities~~or ~~laws~~international ofinvestment, ~~the~~our ~~United~~business ~~States~~in orChina ~~any~~may ~~state~~also be adversely affected.

ItUncertainties ~~may be difficult for us to enforce our rights~~ with respect to the ~~Joint Venture. The recognition and enforcement of foreign judgments are provided for under the~~ PRC ~~Civil~~legal ~~Procedures~~system ~~Law.~~could ~~PRC~~adversely ~~courts~~affect may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment by us ~~against Wider or the Joint Venture if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security, or the public interest~~. ~~As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.~~

ItThe ~~may~~PRC belegal ~~difficult~~system ~~for~~is ~~overseas~~a ~~regulators~~civil tolaw ~~conduct~~system ~~investigations~~based oron ~~collect~~written ~~evidence~~statutes. ~~within~~Unlike ~~China~~the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value.

ItIn ~~may~~1979, bethe ~~difficult~~PRC ~~for~~government ~~you~~began orto ~~overseas~~promulgate ~~regulators,~~a ~~such~~comprehensive assystem ~~the~~of ~~Securities~~laws and ~~Exchange~~regulations ~~Commission~~governing ~~(SEC),~~economic ~~the~~matters ~~Department~~in general. The overall effect of ~~Justice~~legislation ~~(DOJ)~~over ~~and~~the ~~other~~past ~~authorities~~four ofdecades has significantly enhanced the ~~United~~protection ~~States,~~afforded to ~~conduct~~various ~~investigations~~forms orof ~~collect~~foreign ~~evidence~~investments ~~within~~in China. ~~For example~~However, in China, ~~there~~has ~~are~~not ~~significant~~developed ~~legal~~a ~~and~~fully ~~other~~integrated ~~obstacles~~legal ~~to obtaining information~~system, ~~documents~~ and ~~materials~~recently ~~needed~~enacted ~~for~~laws ~~regulatory~~and ~~investigations~~regulations ormay ~~litigation~~not ~~outside~~sufficiently ~~China~~cover orall ~~otherwise~~aspects ~~with~~of ~~respect~~economic toactivities ~~foreign entities. Although the authorities~~ in China. ~~may~~In ~~establish~~particular, ~~a regulatory cooperation mechanism with~~ the ~~securities~~interpretation ~~regulatory~~and ~~authorities~~enforcement of ~~another~~these ~~country~~laws ~~or region to implement cross-border supervision~~ and ~~administration,~~regulations ~~such~~involve ~~regulatory~~uncertainties. ~~cooperation~~Since ~~with~~PRC ~~the~~administrative ~~securities~~and ~~regulatory~~court authorities inhave ~~the~~significant ~~United~~discretion ~~States may not be efficient~~ in ~~the~~interpreting ~~absence of mutual~~ and ~~practical~~implementing ~~cooperation~~statutory ~~mechanism.~~provisions ~~Furthermore,~~and ~~according~~contractual ~~to Article 177 of the PRC Securities Law~~terms, ~~which~~it ~~became~~may ~~effective~~be indifficult ~~March 2020, no overseas securities regulator is allowed~~ to ~~directly~~evaluate ~~conduct investigation or evidence collection activities within~~ the ~~territory~~outcome of ~~the~~administrative ~~PRC.~~and ~~Accordingly,~~court ~~without~~proceedings and the ~~consent~~level of ~~the~~legal ~~competent~~protection ~~PRC~~we ~~securities~~enjoy. ~~regulators~~These ~~and~~uncertainties ~~relevant~~may ~~authorities,~~affect noour ~~entity~~judgment oron ~~individual~~the ~~may~~relevance ~~provide~~of ~~the~~legal ~~documents~~requirements and ~~materials~~our ~~relating~~ability to ~~securities~~enforce ~~business~~our ~~activities~~contractual torights ~~overseas parties. While detailed interpretation of~~ or ~~implementing~~tort ~~rules~~claims. ~~under~~In ~~Article~~addition, ~~177~~regulatory ~~have~~uncertainties ~~yet~~may to be ~~promulgated,~~exploited ~~the~~through ~~inability~~unmerited ~~for~~or anfrivolous ~~overseas~~legal ~~securities~~actions ~~regulator to directly conduct investigation~~ or ~~evidence~~threats ~~collection~~in ~~activities~~attempts ~~within~~to ~~China~~extract ~~may~~payments ~~further~~or ~~increase~~benefits ~~difficulties~~from ~~faced by you in protecting your interests~~us.

3028

~~The~~From ~~PRC’s~~time ~~economic~~to time, ~~political~~we may have to resort to administrative and ~~social~~court ~~conditions~~proceedings to enforce our legal rights, asmost ~~well~~notably asour ~~governmental~~rights ~~policies~~with respect to the Joint Venture. However, ~~could~~since ~~affect~~PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the ~~business~~outcome ~~environment~~of administrative and ~~financial~~court ~~markets~~proceedings and the level of legal protection we enjoy than in ~~China~~more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and ~~our~~internal ~~ability~~rules. As a result, we may not be able to ~~operate~~keep ourselves updated with these policies and rules in time. Such uncertainties, including uncertainty over the scope and effect of our ~~business~~contractual property (including intellectual property) and procedural rights, ~~maintain~~could materially and adversely affect our ~~liquidity~~business and ~~keep~~impede our ~~access~~ability to ~~capital~~continue our operations.

WeThe ~~expect~~approval ~~that a portion~~ of ~~our~~the ~~operations will be conducted in~~ China ~~through~~Securities ~~the~~Regulatory ~~Joint Venture. Accordingly~~Commission, ~~our~~and ~~business,~~other ~~results~~compliance ofprocedures ~~operations, financial condition and prospects~~ may be ~~influenced~~required ~~to a significant degree by economic, political, legal and social conditions~~ in ~~China.~~connection ~~China’s economy differs from the economies of developed countries in many respects, including~~ with ~~respect~~any tooffering ~~the~~we ~~amount~~may ofmake ~~government involvement, level of development, growth rate, control of foreign exchange~~ and ~~allocation of resources. While the PRC economy has experienced significant growth over the past thirty years~~, ~~growth~~if has been uneven across different regions and among various economic sectors of China. The PRC government has implemented various measures to encourage economic development and guide the allocation of resources. Some of these measures may benefit the overall PRC economy but may have a negative effect on us. For examplerequired, ~~our~~we ~~financial~~cannot ~~condition~~predict ~~and~~whether ~~results~~we ofwill ~~operations may~~ be ~~adversely~~able ~~affected by government control over capital investments or changes in tax regulations that are currently applicable~~ to ~~us.~~obtain Insuch ~~addition, in the past the PRC government implemented certain measures, including interest rate increases, to control the pace of economic growth~~approval. These measures may cause decreased economic activity in China, which may adversely affect our business and results of operation. More generally, if the business environment in China deteriorates from the perspective of domestic or international investment, our business in China may also be adversely affected.

~~Uncertainties~~On ~~with~~December 24, ~~respect~~2021, tothe China Securities Regulatory Commission (CSRC), issued Provisions of the ~~PRC~~State ~~legal~~Council ~~system~~on ~~could~~the ~~adversely~~Administration ~~affect~~of usOverseas Securities Offering and Listing by Domestic Companies, and the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies. On February 17, 2023, the CSRC promulgated the Trial Measures for Overseas Listing and the Guidelines for Overseas Listing, or the Filing Rules, which became effective on March 31, 2023.

The new regulations require PRC ~~legal~~companies ~~system~~that isare alisted ~~civil~~or ~~law~~in ~~system~~the ~~based~~process of being listed on ~~written~~foreign ~~statutes~~exchanges (“PRC Companies”) to make certain filings with the CSRC. ~~Unlike~~The new regulations authorize the ~~common~~CSRC ~~law~~to ~~system~~review such fillings, ~~prior~~penalize ~~court~~relevant ~~decisions~~PRC ~~under~~Companies or people in charge, or report to overseas securities regulatory institutions in case of violation of the ~~civil~~Trial ~~law~~Measures, ~~system~~in order to ensure PRC Companies are in compliance with PRC regulations and policies. Failure to file as required could subject us or our controlling stockholders to fines and penalties, which may be ~~cited~~significant. ~~for~~As ~~reference~~of ~~but~~the ~~have~~date ~~limited~~of ~~precedential~~this ~~value~~Report, the CSRC has not published any additional supplemental regulations or guidelines as to PRC Companies and there remains uncertainty regarding the interpretation and enforcement of those newly enacted PRC laws.

InAs ~~1979,~~of the ~~PRC~~date ~~government~~of ~~began~~this toReport, ~~promulgate~~(i) aour ~~comprehensive~~business ~~system~~operations are carried on primarily outside of ~~laws~~China; and ~~regulations~~(ii) ~~governing~~we ~~economic~~do ~~matters~~not inmaintain ~~general.~~any ~~The~~variable ~~overall~~interest ~~effect~~entity ofstructure ~~legislation~~or ~~over~~operate ~~the~~any ~~past~~data ~~four~~center ~~decades~~in ~~has~~China. ~~significantly~~We ~~enhanced~~do ~~the~~not ~~protection~~believe ~~afforded~~that sales of our devices to ~~various~~Wider ~~forms~~to ofdate ~~foreign~~constitute ~~investments~~doing business in China. However, ~~China~~we ~~has~~may ~~not~~still ~~developed~~be asubject ~~fully~~to ~~integrated~~PRC ~~legal~~laws ~~system~~relating to, ~~and~~among ~~recently~~others, ~~enacted~~data ~~laws~~security and ~~regulations~~restrictions ~~may~~over ~~not~~foreign ~~sufficiently~~investments ~~cover~~due ~~all~~to ~~aspects~~the complexity of ~~economic~~the ~~activities~~regulatory regime in China~~. In particular~~, and the ~~interpretation~~recent statements and ~~enforcement~~regulatory ofactions ~~these~~by ~~laws~~the ~~and~~PRC ~~regulations~~government ~~involve~~relating ~~uncertainties.~~to ~~Since~~data ~~PRC~~security ~~administrative~~may ~~and~~affect ~~court~~only ~~authorities~~that ~~have~~portion ~~significant~~of ~~discretion~~the Joint Venture’s business operations conducted in ~~interpreting~~China. ~~and~~Our ~~implementing~~securities ~~statutory~~are ~~provisions~~not ~~and~~being ~~contractual~~offered ~~terms,~~or itsold ~~may~~directly beor ~~difficult~~indirectly in China to ~~evaluate~~or for the ~~outcome~~benefit of, ~~administrative~~legal ~~and~~or ~~court~~natural ~~proceedings~~persons ~~and~~of the ~~level~~PRC. ofTherefore, ~~legal~~we ~~protection~~have wenot ~~enjoy.~~obtained ~~These~~the ~~uncertainties~~approval ~~may~~from ~~affect~~either ~~our~~the ~~judgment~~CSRC onor the ~~relevance~~Cyberspace Administration of ~~legal~~China ~~requirements~~(the “CAC”) for any offering we may make in the future, and ~~our~~we ~~ability~~do not intend to ~~enforce~~obtain ~~our~~the ~~contractual~~approval ~~rights~~from either the CSRC or ~~tort~~the ~~claims.~~CAC Inin ~~addition~~connection with any such future offering, ~~the~~since ~~regulatory~~we ~~uncertainties~~do ~~may~~not bebelieve ~~exploited~~that ~~through~~such ~~unmerited~~approval oris ~~frivolous~~required under these circumstances. Under the PRC’s current legal ~~actions~~system, orChinese ~~threats~~citizens inhave ~~attempts~~the right to ~~extract~~purchase ~~payments~~securities orpublicly issued by overseas companies through legal channels and enjoy corresponding benefits of such ownership. Ownership of such securities does not require approval from usthe CSRC or the CAC.

InOn ~~addition,~~the ~~any~~website ~~administrative~~of ~~and~~the ~~court~~CSRC, ~~proceedings~~the CSRC provides that in ~~China~~accordance ~~may~~with becurrent ~~protracted~~laws and regulations, ~~resulting~~domestic Chinese residents can invest in ~~substantial~~overseas ~~costs~~securities ~~and~~markets ~~diversion~~through oflegal ~~resources~~channels such as purchasing qualified domestic institutional investor (QDII) fund product shares and ~~management~~participating ~~attention~~in Shanghai Hong Kong stock transactions.

InThere ~~May 2019,~~can ~~the~~be ~~Cyberspace~~no ~~Administration~~assurance ofhowever, ~~China~~that ~~(“CAC”)~~regulators ~~issued strict guidelines for the collection and use of data by operators~~ in China. Atwill ~~this~~not ~~time,~~take ~~Wider~~a ~~does~~contrary ~~not~~view ~~share~~or ~~any~~will ~~data~~not ~~from~~subsequently ~~any~~require ~~hospital~~us ~~setting~~to orundergo ~~research~~the ~~setting~~approval ~~with~~procedures ~~Nexalin~~ and ~~Nexalin~~subject ~~does~~us ~~not~~to ~~share~~penalties ~~any~~for ~~data~~non-compliance. ~~from~~The ~~any~~approval ~~hospital~~of ~~setting~~the CSRC or ~~research~~the ~~setting~~CAC, ~~with~~and ~~Wider.~~other ~~All~~compliance ~~clinical~~procedures ~~data,~~may ~~patient~~be ~~data,~~required ~~provider~~in ~~data~~connection ~~associated~~ with ~~China~~any ~~and~~offering ~~the~~we ~~U.S.~~may domake ~~not~~and, ~~affect~~if ~~the~~required, ~~design~~we orcannot ~~statistical~~predict ~~interpretation~~whether ofwe ~~preclinical~~will orbe ~~clinical~~able ~~studies~~to inobtain ~~either~~such ~~country~~approval.

~~Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to us.~~29

The PRC ~~legal~~government ~~system~~has issignificant ~~based~~influence onby ~~written~~enforcing ~~statutes~~existing rules and ~~prior~~regulation, ~~court~~adopting ~~decisions~~new ~~have~~ones, ~~limited~~or ~~value~~changing asrelevant ~~precedents.~~industrial ~~Since~~policies ~~these~~in ~~laws~~a ~~and~~manner ~~regulations~~that ~~are~~may ~~relatively~~materially ~~new~~increase ~~and~~our compliance cost, change the ~~PRC~~relevant ~~legal~~industry ~~system~~landscape ~~continues~~in towhich ~~rapidly~~we ~~evolve,~~operate ~~the~~or ~~interpretations~~otherwise ofcause ~~many~~significant ~~laws~~changes to our business operations in China, ~~regulations~~which could result in material and ~~rules~~adverse ~~are~~changes ~~not~~in ~~always~~our ~~uniform~~operations and ~~enforcement~~cause the value of ~~these~~our ~~laws,~~securities ~~regulations~~to ~~and~~significantly ~~rules~~decline ~~involves~~or ~~uncertainties~~be worthless.

31The PRC’s economy is in a transition from a planned economy to a market-oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions within the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government has been pursuing economic reform policies for more than two decades, there is no assurance that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or ability to continue as a for-profit enterprise, expropriation or nationalization of private enterprises, changes in the allocation of resources or other circumstances affecting the PRC’s political, economic and social environment.

~~From~~We ~~time to time, we~~ may have to resort to administrative and court proceedings to enforce our legal rights, most notably our rights with respect to the Joint Venture. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be ~~more~~subject ~~difficult~~ to ~~evaluate~~anti-monopoly ~~the~~concerns ~~outcome~~as of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules. As a result, ~~we may not be able to keep ourselves updated with these policies and rules in time. Such uncertainties, including uncertainty over the scope and effect~~ of our ~~contractual~~doing ~~property (including intellectual property) and procedural rights, could materially and adversely affect our~~ business ~~and~~in ~~impede our ability to continue our operations~~China.

~~Restrictions~~Article on3 ~~foreign~~of ~~currency~~Anti-Monopoly Law of the People’s Republic of China prohibits “monopolistic practices,” which include: a) the conclusion of monopoly agreements between operators; b) the abuse of dominant market position by operators; c) concentration of undertakings which has or may ~~limit~~have the effect of eliminating or restricting market competition. According to Article 19, the operator(s) will be assumed to have a dominant market position if it has following situation: a) an operator has 50% or higher market share in a relevant market; b) two operators have 66% or higher market share in a relevant market; c) three operators have 75% or higher market share in a relevant market. We believe we have not conducted any monopolistic practices in China, and that recent statements and regulatory actions by the Chinese government do not impact our ability to ~~receive~~conduct ~~and~~business, ~~use~~accept foreign investments, create the Joint Venture with Wider, establish our ~~revenue~~WOFE ~~effectively~~in China or list on a U.S. or other foreign stock exchange. However, there can be no assurance that regulators in China will not promulgate new laws and regulations or adopt new series of regulatory actions which may require us or the Joint Venture to meet new requirements on the issues mentioned above.

~~The~~Changes ~~PRC government imposes controls on the conversion of the Renminbi into foreign currencies and,~~ in ~~certain cases, the remittance of foreign currency out of China~~U. ~~To date, the payments we have received from Wider have been in United States dollars, although in the future, payments from Wider or from the Joint Venture may be in Renminbi~~S. ~~Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments~~ and international trade ~~and service-related foreign exchange transactions~~policies, ~~can~~particularly ~~be made in foreign currencies without prior approval of China’s State Administration of Foreign Exchange (SAFE), by complying~~ with ~~certain~~respect ~~procedural requirements. However, approval from or registration with appropriate government authorities is required where Renminbi is~~ to ~~be converted into foreign currency and remitted out of~~ China ~~to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result~~, wemay ~~would~~adversely ~~need~~impact ~~to obtain approval from SAFE to use cash generated from~~ our ~~operations~~business toand ~~pay~~operating ~~off any debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi~~results. The PRC government may restrict access to foreign currencies for current account transactions in the future. The foreign exchange control system could prevent us from obtaining sufficient foreign currencies to satisfy our foreign currency demands.

~~Fluctuation~~Changes into ~~exchange~~policy ~~rates~~implemented ~~could~~by the U.S. Congress, the Trump administration or any new administration have aimpacted ~~negative~~and ~~effect~~may onin the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. Because certain of our ~~results~~manufacturers and suppliers are located in China, we are exposed to the possibility of ~~operations~~product supply disruption and increased costs in the ~~value~~event of anchanges ~~investment~~in the policies, laws, rules and regulations of the United States or foreign governments, as well as political unrest or unstable economic conditions in foreign countries. Recently, the ~~Company~~U.S government has announced substantial changes in U.S. trade policy and U.S. trade agreements, including the initiation of tariffs and trade restrictions on goods from China. In response to these measures, China has retaliated by imposing tariffs on certain goods from the U.S. Our components may in the future be subject to these tariffs, which could increase our manufacturing costs and could make our products, if successfully developed and approved, less competitive than those of our competitors whose inputs are not subject to these tariffs. We may otherwise experience supply disruptions or delays, and our suppliers may not continue to provide us with clinical supply in our required quantities, to our required specifications and quality levels or at attractive prices. In addition, certain Chinese contract manufacturing organizations may become subject to trade restrictions, sanctions, other regulatory requirements, or proposed legislation by the U.S. government, which could restrict or even prohibit our ability to work with such entities, thereby potentially disrupting the supply of material to us. Such disruption could have adverse effects on the development of our product candidates and our business operations.

The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. On November 30, 2015, the Executive Board of the International Monetary Fund, or IMF, completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, the Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the euro, the Japanese yen and the British pound. Since the fourth quarter of 2016, the Renminbi has depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchange market and progress toward interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

~~Very~~Risks ~~limited~~Related ~~hedging options are available in China~~ to ~~reduce~~Our ~~our~~Intellectual exposure to exchange rate fluctuations. As of the date of this Form 10-K, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or hedge our exposure at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency or to convert foreign currency into Renminbi.Property

~~The~~If ~~approval~~we ofare ~~the~~unable ~~CSRC,~~to obtain and ~~other~~maintain ~~compliance~~patent ~~procedures~~protection ~~may~~for beour ~~required~~technologies inand ~~connection~~products, ~~with~~or ~~any~~if ~~offering~~the wescope ~~may~~of ~~make~~the ~~and,~~patent ifprotection ~~required~~obtained is insufficient, weour ~~cannot~~competitors ~~predict~~could ~~whether~~develop weand ~~will~~commercialize betechnologies ~~able~~and products similar or identical to ~~obtain~~ours, ~~such~~and ~~approval~~our ability to successfully commercialize our technologies and products may be impaired.

OnOur ~~December~~success 24depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our products. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to our technologies and products. If we do not adequately protect our intellectual property, ~~2021~~competitors may be able to use our technologies and erode or negate any competitive advantage that we may have, ~~the~~which ~~CSRC~~could harm our business and ability to achieve profitability. To protect our proprietary positions, ~~issued~~we ~~Provisions of~~file patent applications in the ~~State~~United ~~Council~~States onand ~~the~~abroad ~~Administration~~related ofto ~~Overseas~~our ~~Securities~~novel ~~Offering~~technologies and ~~Listing~~products bythat ~~Domestic~~are ~~Companies~~important to our business. The patent application and prosecution processes are expensive and time-consuming. We and our current licensees, or any future licensors and ~~the~~licensees ~~Provisions~~may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We or our current licensees, or any future licensors or licensees may also fail to identify patentable aspects of our research and development before it is too late to obtain patent protection. Therefore, these and any of our patents and applications may not be prosecuted and enforced in a manner consistent with the ~~State~~ ~~Council~~best oninterests of our business. It is possible that defects of form in the ~~Administration~~preparation or filing of ~~Overseas~~our ~~Securities~~patents ~~Offering~~or ~~and~~patent ~~Listing~~applications bymay ~~Domestic~~exist, ~~Companies~~or may arise in the future, such as with respect to proper priority claims, inventorship, claim scope or patent term adjustments. OnIf ~~February~~our 17current licensees, ~~2023~~or any future licensors or licensees, ~~the~~are ~~CSRC promulgated~~not fully cooperative or disagree with us as to the ~~Trial~~prosecution, ~~Measures~~maintenance ~~for~~or ~~Overseas~~enforcement ~~Listing~~of any patent rights, such patent rights could be compromised and we might not be able to prevent third parties from making, using and selling competing products. If there are material defects in the ~~Guidelines~~form ~~for~~or ~~Overseas~~preparation ~~Listing~~of our patents or patent applications, such patents or ~~the~~applications ~~Filing~~may ~~Rules~~be invalid and unenforceable. Moreover, ~~which~~our ~~became~~competitors ~~effective on~~may ~~March~~independently 31develop equivalent knowledge, ~~2023~~methods and know-how. Any of these outcomes could impair our ability to prevent competition from third parties.

32Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Furthermore, changes in patent laws in the United States, including the America Invents Act of 2011, may affect the scope, strength and enforceability of our patent rights or the nature of proceedings that may be brought by us related to our patent rights.

~~The~~We ~~new~~may ~~regulations~~not ~~require~~be ~~PRC~~aware ~~companies~~of ~~that are~~all ~~listed~~third-party orintellectual inproperty ~~the~~rights ~~process~~potentially relating to our current and future products. Publications of ~~being~~discoveries ~~listed~~in onthe ~~foreign~~scientific ~~exchanges~~literature ~~(“PRC~~often ~~Companies”)~~lag tobehind ~~make~~the ~~certain~~actual ~~filings~~discoveries, ~~with~~and patent applications in the ~~CSRC~~United States and other jurisdictions are typically not published until eighteen months after filing, or in some cases not at all. ~~The~~ ~~new~~Therefore, ~~regulations~~we ~~authorize~~cannot be certain that we were the ~~CSRC~~first to ~~review~~make ~~such~~the ~~fillings,~~inventions ~~penalize~~claimed ~~relevant~~in ~~PRC~~our ~~Companies~~patents or ~~people~~pending inpatent ~~charge~~applications, or ~~report~~that towe ~~overseas securities~~were ~~regulatory~~the ~~institutions~~first into ~~case~~file offor ~~violation~~patent protection of ~~the~~such ~~Trial~~inventions. ~~Measures~~Similarly, inshould ~~order~~we toown ~~ensure~~any ~~PRC~~patents ~~Companies~~or ~~are~~patent applications in ~~compliance~~the ~~with PRC~~future, ~~regulations~~we ~~and~~may ~~policies.~~not ~~Failure~~be certain that we were the first to file asfor ~~required~~patent ~~could~~protection ~~subject~~for usthe inventions claimed in such patents or ~~our~~patent ~~controlling~~applications. ~~stockholders~~As toa ~~fines~~result, the issuance, scope, validity and ~~penalties~~commercial value of our patent rights cannot be predicted with any certainty. Moreover, ~~which~~ we may be ~~significant.~~subject Asto a third-party pre-issuance submission of prior art to the ~~date~~U.S. ofPatent ~~this~~and ~~annual~~Trademark ~~report~~Office (the “USPTO”), or become involved in opposition, derivation, re-examination, inter partes review or interference proceedings, in the ~~CSRC~~United ~~has~~States ~~not~~or ~~published~~elsewhere, challenging our patent rights or the patent rights of others. An adverse determination in any ~~additional~~such ~~supplemental~~submission, ~~regulations~~proceeding or ~~guidelines as~~litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to ~~PRC~~commercialize ~~Companies~~our technology or products and ~~there~~compete ~~remains~~directly ~~uncertainty~~with ~~regarding~~us, ~~the~~without ~~interpretation~~payment ~~and~~to ~~enforcement~~us, ofor ~~those~~result ~~newly~~in ~~enacted~~our ~~PRC~~inability ~~laws~~to manufacture or commercialize products without infringing third-party patent rights.

As of the date of this Form 10-K, (i) our business operations are carried on outside of China; and (ii) we do not maintain any variable interest entity structure or operate any data center in China. We do not believe that sales of our devices to Wider to date constitute doing business in China. We may still be subject to PRC laws relating to, among others, data security and restrictions over foreign investments due to the complexity of the regulatory regime in China, and the recent statements and regulatory actions by the PRC government relating to data security may affect only that portion of the Joint Venture’s business operations conducted in China. Our securities are not being offered or sold directly or indirectly in China to or for the benefit of, legal or natural persons of the PRC. Therefore, we have not obtained the approval from either the China Securities Regulatory Commission (the “CSRC”) or the Cyberspace Administration of China (the “CAC”) for any offering we may make in the future, and we do not intend to obtain the approval from either the CSRC or the CAC in connection with any such future offering, since we do not believe that such approval is required under these circumstances. Under the PRC’s current legal system, Chinese citizens have the right to purchase securities publicly issued by overseas companies through legal channels and enjoy corresponding benefits of such ownership. Ownership of such securities does not require approval from the CSRC or the CAC.31

OnOur ~~the~~pending ~~website~~and offuture ~~the~~patent ~~CSRC,~~applications ~~the~~may ~~CSRC~~not ~~provides~~result in patents being issued that protect our technology or products, in ~~accordance~~whole ~~with~~or ~~current~~in ~~laws~~part, or which effectively prevent others from commercializing competitive technologies and ~~regulations~~products. Even if our patent applications issue as patents, ~~domestic~~they ~~Chinese~~may ~~residents~~not ~~can~~issue ~~invest~~in a form that will provide us with any meaningful protection against competing products or processes sufficient to achieve our business objectives, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in ~~overseas~~a ~~securities~~non-infringing ~~markets~~manner. ~~through~~Alternatively, ~~legal~~our ~~channels~~competitors ~~such~~may asseek ~~purchasing~~approval ~~qualified~~to ~~domestic~~market ~~institutional~~their ~~investor~~own ~~(QDII)~~products ~~fund~~similar ~~product~~to ~~shares~~or otherwise competitive with our products. In these circumstances, we may need to defend and/or ~~participating~~assert inour ~~Shanghai~~patents, ~~Hong~~including ~~Kong~~by ~~stock~~filing ~~transactions~~lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid and/or unenforceable.

~~There~~The ~~can~~issuance beof noa ~~assurance~~patent ~~however,~~is ~~that~~not ~~regulators~~conclusive inas ~~China~~to ~~will~~its ~~not~~inventorship, ~~take~~scope, avalidity ~~contrary~~or ~~view~~enforceability, orand ~~will~~our ~~not~~owned ~~subsequently~~and ~~require~~licensed uspatents tomay ~~undergo~~be challenged in the ~~approval~~courts ~~procedures~~or ~~and~~patent ~~subject~~offices usin tothe ~~penalties~~United ~~for~~States ~~non-compliance~~and abroad. ~~The~~Such ~~approval~~challenges may result in loss of ~~the~~exclusivity ~~CSRC~~or freedom to operate or ~~the~~in ~~CAC~~patent claims being narrowed, ~~and~~invalidated ~~other~~or ~~compliance~~held ~~procedures~~unenforceable, ~~may~~in bewhole ~~required~~or in ~~connection~~part, ~~with~~which ~~any~~could ~~offering~~limit weour ~~may~~ability ~~make~~to stop others from using or commercializing similar or identical technologies and products, ifor limit the duration of the patent protection of our technologies and products. In addition, given the amount of time required for the development, wetesting ~~cannot~~and ~~predict~~regulatory ~~whether~~review weof ~~will~~new beproducts, ~~able~~patents toprotecting ~~obtain~~such candidates might expire before or shortly after such ~~approval~~candidates are commercialized.

~~Recent~~We ~~regulatory developments in China~~ may ~~subject~~become ~~the~~involved ~~Joint~~in ~~Venture~~lawsuits to ~~additional~~protect ~~regulatory review and disclosure requirement, expose the Joint Venture to government interference,~~ or ~~otherwise~~enforce ~~restrict~~ our ~~ability~~patents toor ~~offer~~other ~~securities~~intellectual ~~and raise capital outside China~~property, ~~all of~~ which could ~~materially~~be ~~and~~expensive, ~~adversely~~time-consuming ~~affect our business~~ and ~~the value of our securities~~unsuccessful.

InCompetitors ~~light~~may ofinfringe ~~the~~our ~~recent~~issued ~~statements~~patents, bytrademarks, ~~the~~copyrights ~~Chinese~~or ~~government~~other ~~indicating~~intellectual ~~its~~property. ~~intention~~To tocounter ~~exert~~infringement ~~more~~or ~~oversight~~unauthorized ~~and~~use, ~~control~~we ~~over~~may ~~overseas~~be ~~offerings~~required ofto ~~China-based~~file ~~companies~~infringement ~~and~~claims, ~~the~~which ~~proposed~~can ~~CAC~~be ~~review~~expensive ~~for~~and ~~certain~~time-consuming ~~data~~and ~~processing~~divert ~~operators~~the intime ~~China,~~and ~~the~~attention ~~Joint~~of ~~Venture~~our ~~may~~management ~~adjust~~and ~~its~~scientific ~~business~~personnel. ~~operations~~Any inclaims ~~the~~we ~~future,~~assert toagainst ~~comply~~perceived ~~with~~infringers ~~PRC~~could ~~laws~~provoke ~~regulating~~these ~~our~~parties ~~industry~~to ~~and~~assert ~~our~~counterclaims ~~business~~against ~~operations~~us ~~through~~alleging ~~the~~that ~~Joint~~we ~~Venture.~~infringe ~~However~~their patents, ~~such~~trademarks, ~~efforts~~copyrights ~~may~~or ~~not~~other beintellectual ~~completed~~property. In addition, in a ~~liability-free~~patent ~~manner~~infringement orproceeding, atthere ~~all.~~is Wea ~~cannot~~risk that wea court will ~~not~~decide bethat ~~subject~~a topatent ~~PRC~~of ~~regulatory~~ours ~~inspection~~is ~~and/~~invalid or ~~review~~unenforceable, ~~relating~~in towhole ~~cybersecurity~~or in part, ~~especially~~and ~~when~~that ~~there~~we ~~remains~~do ~~significant~~not ~~uncertainty~~have asthe right to stop the ~~scope~~other ~~and~~party ~~manner~~from ofusing the ~~regulatory~~invention ~~enforcement~~at issue. IfThere is also a risk that, even if the ~~Joint~~validity ~~Venture~~of issuch ~~subject~~patents tois ~~regulatory~~upheld, ~~inspection~~the ~~and/or~~court ~~review~~will byconstrue the ~~CAC~~patent’s claims narrowly or ~~other~~decide ~~PRC~~that ~~authorities~~we ordo ~~are~~not ~~required~~have bythe ~~them~~right to ~~take~~stop ~~any~~the ~~specific~~other ~~actions,~~party itfrom ~~could~~using ~~cause~~the ~~suspension~~invention orat ~~termination~~issue ofon the ~~future~~grounds ~~offering~~that of our ~~securities,~~patents ~~disruptions~~do tonot ~~our~~cover ~~operations,~~the ~~result~~invention. An adverse outcome in ~~negative~~a ~~publicity~~litigation ~~regarding~~or proceeding involving our ~~company,~~patents ~~and~~could ~~divert~~limit our ~~managerial~~ability ~~and~~to ~~financial~~assert ~~resources.~~our ~~The~~patents ~~Joint~~against ~~Venture~~those parties or other competitors and may ~~also~~curtail beor ~~subject~~preclude our ability to ~~fines~~exclude third parties from making and selling similar or ~~other~~competitive ~~penalties~~products. Similarly, ~~which~~if ~~could~~we ~~materially~~assert ~~and~~trademark ~~adversely~~infringement ~~affect~~claims, ~~our~~a ~~business~~court may determine that the marks we have asserted are invalid or unenforceable, ~~financial~~or ~~condition~~that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, ~~and~~we ~~results~~could ultimately be forced to cease use of ~~operations~~such trademarks.

33In any infringement litigation, any award of monetary damages we receive may not be commercially valuable. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

~~We may be subject to PRC laws relating to~~Accordingly, ~~among~~despite ~~others,~~our data security and restrictions over foreign investments in value-added telecommunications services and other industry sectors set out in the Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020 Edition). Specificallyefforts, we may not be ~~subject~~able to ~~PRC~~prevent ~~laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These PRC laws apply not only to~~ third~~-party~~ ~~transactions, but also to transfers of information between us and our wholly foreign-owned enterprises in China, and other~~ parties ~~with~~from ~~which we have commercial relations. These PRC laws and their interpretations and enforcement continue to develop and are subject to change~~infringing, ~~and~~misappropriating ~~the~~or ~~PRC~~successfully ~~government~~challenging may adopt other rules and restrictions in the future. The recent regulatory developments in China, in particular with respect to restrictions on China-based companies raising capital offshore, and the government-led cybersecurity reviews of certain companies with VIE structure, may lead to additional regulatory review in China over our ~~financing~~intellectual ~~and~~property ~~capital raising activities in the United States~~rights. ~~Pursuant~~Uncertainties toresulting ~~the~~from ~~PRC Cybersecurity Law, which was promulgated by~~ the ~~Standing~~initiation ~~Committee of the National People’s Congress on November 7, 2016~~ and ~~took~~continuation ~~effect on June 1, 2017, personal information and important data collected and generated by a critical information infrastructure operator in the course~~ of ~~its~~patent ~~operations~~litigation inor ~~China~~other ~~must~~proceedings becould ~~stored~~have ~~in China, and if~~ a ~~critical~~negative ~~information~~impact ~~infrastructure~~on ~~operator~~our ~~purchases~~ability ~~internet products and services that affect or may affect national security, it should be subject~~ to ~~cybersecurity~~compete ~~review~~in by the ~~CAC~~marketplace.

The PRC Cybersecurity Law also establishes more stringent requirements applicable to operators of computer networks, especially to operators of networks which involve critical information infrastructure. The PRC Cybersecurity Law contains an overarching framework for regulating Internet security, protection of private and sensitive information, and safeguards for national cyberspace security and provisions for the continued government regulation of the Internet and content available in China. The PRC Cybersecurity Law emphasizes requirements for network products, services, operations and information security, as well as monitoring, early detection, emergency response and reporting. Due to the lack of further interpretations, the exact scope of “critical information infrastructure operator” remains unclear.32

OnThird ~~July~~parties ~~10,~~may ~~2021,~~initiate ~~the~~legal ~~CAC~~proceedings ~~publicly~~alleging ~~issued~~that ~~the Cybersecurity~~we ~~Review~~are ~~Measures~~infringing ~~(the~~their ~~“Draft~~intellectual ~~Measures”)~~property ~~for public comments until July 25~~rights, ~~2021. On January 4, 2022, together with 12 other Chinese regulatory authorities,~~ the ~~CAC~~outcome ~~released the final version~~ of ~~the Revised Draft CAC Measures (the “Revised CAC Measures”),~~ which ~~came~~would into effect on February 15, 2022. Pursuant to the Revised CAC Measures, critical information infrastructure operators procuring network products and services, and online platform operators (as opposed to “data processors” in the Revised Draft CAC Measures) carrying out data processing activities which affect or may affect national security, shall conduct a cybersecurity review pursuant to the provisions therein. In addition, online platform operators possessing personal information of more than one million users seeking to be ~~listed~~uncertain on foreign stock markets must apply for a cybersecurity review. On November 14, 2021, the CAC further published the Regulations on Network Data Security Management (Draft for Comment) (the “Draft Management Regulations”) for public comment. On September 24, 2024, the State Council released the final version of the Draft Management Regulations (the “Management Regulations”), which came into effect on January 1, 2025. Under the Management Regulations, online data processors refer to individuals and ~~organizations who~~could ~~determine~~significantly ~~the~~harm ~~data~~our ~~processing activities in terms of the purpose and methods at their discretion~~business. The Management Regulations reiterate that online data processors shall be subject to national security review pursuant to relevant provisions if they carry out data processing activities which affect or may affect national security.

~~The~~Our ~~Revised~~commercial ~~CAC~~success ~~Measures do not provide for a definition of “online platform operator”~~depends, ~~“online~~in ~~platform service provider” or “online data processor.” However~~part, weon doour ~~not~~ability ~~expect~~ to ~~become subject to cybersecurity review by the CAC for issuing securities to foreign investors because: (i) the Joint Venture~~develop, ~~as opposed to Nexalin~~manufacture, ismarket ~~the entity which hands the clinical~~ and ~~preclinical~~sell ~~data~~our asproducts ~~part the research~~ and ~~development in~~use ~~China,~~our ~~(ii)~~proprietary ~~such~~technologies ~~data,~~without ~~either~~infringing ~~by its nature or in scale, do not normally trigger significant concerns over PRC national security; and (iii) we have not processed, and do not anticipate to process in~~ the ~~foreseeable~~intellectual ~~future,~~property ~~personal information for more than one million users or persons. However, there remains uncertainty as to how the Revised CAC Measures,~~ and ~~the~~other ~~Management~~proprietary ~~Regulations~~rights ~~when~~of itthird comes into effect in January 2025, will be interpreted or implemented; for example, neither the Revised CAC Measures nor the Management Regulations provides further clarification or interpretation on the criteria for determining those activities that “affect or may affect national security” and relevant Chinese regulatory authorities may interpret it broadlyparties. ~~Furthermore, there remains uncertainty as to whether the Chinese regulatory authorities may adopt new laws, regulations, rules, or detailed implementation~~

~~and~~There ~~interpretation~~is inpotential ~~relation,~~for ora insubstantial ~~addition, to~~amount ~~the~~of ~~Revised~~intellectual ~~CAC~~property ~~Measures~~litigation ~~and~~in ~~the~~our ~~Management~~industry, ~~Regulations.~~and Ifwe ~~the~~may ~~Joint~~become ~~Venture~~party ~~becomes subject~~ to, ~~cybersecurity inspection and/~~or ~~review by~~threatened ~~the~~with, ~~CAC~~litigation or other ~~PRC~~adversarial ~~authorities~~proceedings orregarding ~~are~~intellectual ~~required~~property byrights ~~them~~with respect to ~~take~~our ~~any~~technology ~~specific~~or ~~actions~~products, itincluding ~~could~~interference ~~cause~~proceedings ~~suspension~~before ~~or termination of~~ the ~~future~~USPTO. ~~offering~~Intellectual ofproperty ~~our~~disputes ~~securities,~~arise ~~disruptions to our operations, result~~ in ~~negative~~a ~~publicity~~number ~~regarding~~of ~~our~~areas ~~company,~~including ~~and~~with ~~divert~~respect ~~our managerial and financial resources. We may also be subject~~ to ~~significant~~patents, ~~fines~~use orof other ~~penalties,~~proprietary ~~which~~rights ~~could materially~~ and ~~adversely affect~~the ~~our~~contractual ~~business,~~terms ~~financial condition and results~~ of ~~operations~~license arrangements. InThird ~~the~~parties ~~event~~may ~~the~~assert ~~Joint~~claims ~~Venture~~against ~~becomes~~us ~~subject~~based toon ~~cybersecurity~~existing ~~inspection and/~~or ~~review~~future byintellectual ~~the~~property ~~CAC~~rights. orThe ~~other~~outcome ~~PRC~~of ~~authorities~~intellectual orproperty ~~are~~litigation ~~required~~is bysubject ~~them~~ to ~~take~~uncertainties ~~any~~that ~~specific~~cannot ~~actions,~~be weadequately ~~and~~quantified ~~the Joint Venture will take any and all actions to remain~~ in ~~compliance with any such laws or regulations or detailed implementations and interpretations thereof~~advance.

34If we are found to infringe a third party’s intellectual property rights, we could be forced, including by court order, to cease developing, manufacturing or commercializing the infringing product candidate or product. Alternatively, we may be required to obtain a license from such third party in order to use the infringing technology and continue developing, manufacturing or marketing the infringing product candidate.

~~Also~~However, ~~the~~we ~~Standing~~may ~~Committee~~not ofbe ~~the~~able ~~National~~to ~~People’s Congress~~obtain ~~released~~any ~~the~~required ~~Personal~~license ~~Information~~on ~~Protection~~commercially ~~Law,~~reasonable ~~which~~terms ~~became~~or ~~effective~~at ~~in 2021~~all. ~~The~~Even ~~Personal~~if ~~Information~~we ~~Protection~~were ~~Law~~able ~~provided~~ to obtain a ~~comprehensive~~license, ~~set~~it ofcould ~~data~~be ~~privacy~~non-exclusive, ~~and~~thereby ~~protection~~giving ~~requirements~~our ~~that~~competitors ~~apply~~access to the ~~processing~~same oftechnologies ~~personal~~licensed ~~information and expands data protection compliance obligations~~ to ~~cover~~us. ~~the~~In ~~processing of personal information of persons by organizations and individuals in China~~addition, ~~and~~ ~~the~~we ~~processing~~could ofbe ~~personal~~found ~~information~~liable ~~of persons in China outside of China if such processing is~~ for ~~purposes~~monetary ~~of providing products and services to~~damages, orincluding ~~analyzing~~treble ~~and~~damages ~~evaluating the behavior of, persons in China. The Personal Information Protection Law also provides that critical information infrastructure operators~~ and ~~personal~~attorneys’ ~~information~~fees ~~processing~~if ~~entities~~we ~~who process personal information meeting a volume threshold set by Chinese cyberspace regulators~~ are ~~also~~found ~~required~~ to ~~store~~have inwillfully ~~China~~infringed ~~personal information generated or collected in China, and to pass~~ a ~~security assessment administered by Chinese cyberspace regulators for any export of such personal information~~patent. ~~The~~ ~~Personal~~A ~~Information~~finding ~~Protection Law also contains proposals for significant fines for serious violations. The State Council~~ of ~~the PRC~~infringement ~~issued~~could ~~Regulations~~prevent onus ~~the~~from ~~Administration~~commercializing ofour ~~Network~~products ~~Data~~or ~~Security,~~force ~~which~~us ~~came~~to ~~into~~cease ~~effect~~some ~~on January 1, 2025, and implemented a series~~ of ~~detailed~~our ~~requirements~~business ~~regarding~~operations. ~~data~~Claims ~~protection.~~that ~~With~~we ~~regard~~have tomisappropriated the ~~cross-border~~confidential ~~transfer of personal~~ information, ~~the~~or ~~Cyberspace~~trade ~~Administration~~ secrets of ~~China~~third ~~released~~parties ~~the~~could ~~Regulations~~have ona ~~Promoting~~similar ~~and~~negative ~~Regulating~~effect ~~Cross-border Data Flows in 2024. The Regulations~~ on ~~Promoting~~our ~~and Regulating Cross-border Data Flows establishes the latest regulatory framework for the cross-border transfer of personal information~~business.

On March 17, 2018, the General Office of the PRC State Council promulgated the Measures for the Management of Scientific Data (the Scientific Data Measures), which provide a broad definition of scientific data and relevant rules for the management of scientific data. According to the Scientific Data Measures, enterprises in China must seek governmental approval before any scientific data involving a state secret may be transferred abroad or to foreign parties. The Company does not currently believe any of the Company’s scientific data resulting from activities in China to be conducted by the Joint Venture would fall within the Measures for the Management of Scientific Data promulgated by the General Office of the PRC State Council. Therefore, we do not believe the PRC would prevent us from seeking foreign approval and commercialization of our product candidates. In the event the Joint Venture becomes subject to cybersecurity inspection and/or review by the CAC or other PRC authorities or are required by them to take any specific actions, we and the Joint Venture will take any and all actions to remain in compliance with any such laws or regulations or detailed implementations and interpretations thereof. If we are unable to ~~obtain~~protect the ~~necessary~~confidentiality ~~approvals~~of ~~in a timely manner, or at all,~~ our ~~research~~trade ~~and development of product candidates may be hindered~~secrets, ~~which may materially and adversely affect~~ our business~~, results~~ ~~of operations, financial conditions~~ and ~~prospects.~~competitive Ifposition ~~relevant~~would ~~government authorities consider the transmission of our scientific data to~~ be ~~in violation of the requirements under the Scientific Data Measures, we may be subject to specific administrative penalties imposed by those government authorities~~harmed.

~~The~~In ~~PRC~~addition ~~government~~to ~~has~~seeking ~~significant~~patent ~~influence~~and bytrademark ~~enforcing~~protection ~~existing~~for ~~rules~~our ~~and~~products, ~~regulation~~we also rely on trade secrets, ~~adopting~~including ~~new~~unpatented ~~ones~~know-how, ortechnology ~~changing~~and ~~relevant~~other ~~industrial~~proprietary ~~policies~~information, into amaintain ~~manner~~our ~~that~~competitive ~~may~~position. ~~materially~~We ~~increase~~seek to protect our ~~compliance~~trade ~~cost~~secrets, ~~change~~in ~~relevant~~part, ~~industry~~by ~~landscape~~entering orinto ~~otherwise~~non-disclosure ~~cause~~and ~~significant~~confidentiality ~~changes~~agreements with parties who have access to them, such as our ~~business~~employees, ~~operations~~corporate incollaborators, ~~China~~outside scientific collaborators, ~~which~~contract ~~could~~manufacturers, ~~result~~consultants, inadvisors ~~material~~and other third parties. We also enter into confidentiality and ~~adverse~~invention ~~changes~~or inpatent assignment agreements with our ~~operations~~employees and ~~cause~~consultants. Despite these efforts, any of these parties may breach the ~~value~~agreements and disclose our proprietary information, including our trade secrets. Monitoring unauthorized uses and disclosures of our ~~securities~~intellectual property is difficult, and we do not know whether the steps we have taken to ~~significantly~~protect ~~decline~~our orintellectual property will be ~~worthless~~effective. In addition, we may not be able to obtain adequate remedies for any such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.

~~The~~Moreover, ~~PRC’s~~our ~~economy~~competitors ismay inindependently adevelop ~~transition~~knowledge, ~~from a~~methods ~~planned~~and ~~economy to a market~~know-~~oriented~~how ~~economy~~equivalent ~~subject~~ to ~~five-year~~our ~~and~~trade ~~annual plans adopted by the government that set national economic development goals~~secrets. ~~Policies~~Competitors of the PRC government can have significant effects on the economic conditions within the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. A change in policies by the PRC government could ~~adversely affect~~purchase our ~~interests~~products ~~by,~~and ~~among~~replicate ~~other~~some ~~factors: changes in laws, regulations~~ or ~~the~~all ~~interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources~~ of ~~supplies, or~~ the ~~expropriation~~competitive oradvantages ~~nationalization~~we ofderive ~~private~~from ~~enterprises.~~our ~~Although~~development ~~the~~efforts ~~PRC government~~for ~~has~~technologies ~~been~~on ~~pursuing~~which ~~economic~~we ~~reform~~do ~~policies~~not ~~for~~have ~~more~~patent ~~than~~protection. ~~two~~If ~~decades,~~any ~~there~~of isour notrade ~~assurance~~secrets ~~that~~were ~~the government will continue~~ to ~~pursue~~be ~~such~~lawfully ~~policies~~obtained or ~~that~~independently ~~such~~developed ~~policies~~by ~~may~~a ~~not be significantly altered~~competitor, ~~especially~~we inwould ~~the~~have ~~event~~no ofright ato ~~change~~prevent ~~in leadership~~them, ~~social~~ or ~~political~~those ~~disruption,~~to ~~confiscatory~~whom ~~taxation,~~they ~~restrictions~~communicate ~~on currency conversion~~it, ~~imports~~from orusing ~~sources~~that oftechnology ~~supplies,~~ or ~~ability~~information to ~~continue as~~compete awith ~~for-profit~~us. ~~enterprise,~~If ~~expropriation~~any ~~or nationalization~~ of ~~private~~our ~~enterprises,~~trade ~~changes~~secrets inwere ~~the~~to ~~allocation~~be ofdisclosed ~~resources~~to or ~~other~~independently ~~circumstances affecting~~developed ~~the~~by ~~PRC’s~~a ~~political~~competitor, ~~economic~~our ~~and~~competitive ~~social~~position ~~environment~~would be harmed.

3533

We may not be ~~subject~~able to ~~anti-monopoly~~protect ~~concerns~~our asintellectual aproperty ~~result~~rights ofthroughout ~~our~~the ~~doing business in China~~world.

~~Article~~Filing, 3prosecuting ofand ~~Anti-Monopoly~~defending ~~Law~~patents ofon ~~the~~products ~~People’s~~in ~~Republic~~all ofcountries ~~China~~throughout ~~prohibits “monopolistic practices,” which include: a)~~ the ~~conclusion~~world ofwould ~~monopoly~~be ~~agreements~~prohibitively ~~between~~expensive, ~~operators;~~and b)our ~~the~~intellectual ~~abuse~~property ofrights ~~dominant~~in ~~market~~some ~~position~~countries byoutside ~~operators;~~the c)United ~~concentration~~States ofcould ~~undertakings~~be ~~which~~less ~~has~~extensive orthan ~~may~~those ~~have~~in the ~~effect~~United ~~of eliminating or restricting market competition~~States. ~~Also,~~In ~~according~~some ~~to Article 19~~cases, ~~the~~we ~~operator(s)~~may ~~will~~not be ~~assumed~~able to ~~have~~obtain apatent ~~dominant~~protection ~~market~~for ~~position~~certain iflicensed ittechnology ~~has~~outside ~~following~~the ~~situation:~~United a)States. anIn ~~operator~~addition, ~~has~~the ~~50%~~laws orof ~~higher~~some ~~market~~foreign ~~share~~countries indo anot ~~relevant~~protect ~~market;~~intellectual b)property ~~two~~rights ~~operators~~to ~~have~~the ~~66%~~same orextent ~~higher~~as ~~market~~federal ~~share~~and instate alaws ~~relevant~~in ~~market;~~the c)United ~~three~~States, ~~operators~~even ~~have~~in ~~75%~~jurisdictions orwhere ~~higher~~we ~~market~~do ~~share~~pursue inpatent ~~a relevant market~~protection. WeConsequently, ~~believe~~ we ~~have~~may not ~~conducted~~be ~~any~~able ~~monopolistic~~to ~~practices~~prevent inthird ~~China,~~parties ~~and~~from ~~that~~practicing ~~recent~~our ~~statements~~inventions ~~and~~in ~~regulatory~~all ~~actions~~countries byoutside the ~~Chinese~~United ~~government do not impact our ability to conduct business~~States, ~~accept~~even ~~foreign~~in ~~investments,~~jurisdictions ~~create~~where ~~the~~we ~~Joint~~do ~~Venture~~pursue ~~with~~patent ~~Wider~~protection or ~~list~~from onselling ~~a U.S.~~ or ~~other~~importing ~~foreign~~products ~~stock~~made ~~exchange.~~using ~~However,~~our ~~there~~inventions ~~can be no assurance that regulators~~ in ~~China will not promulgate new laws~~ and ~~regulations~~into orthe ~~adopt~~United ~~new~~States ~~series of regulatory actions which may require us~~ or ~~the~~other ~~Joint Venture to meet new requirements on the issues mentioned above~~jurisdictions.

WeCompetitors may beuse ~~subject~~our technologies in jurisdictions where we have not pursued and obtained patent protection to ~~regulatory~~develop their own products and, ~~other~~further, ~~risks~~may ifexport weotherwise ~~were~~infringing products to ~~operate~~territories ~~Variable~~where ~~Interest~~we ~~Entities~~have patent protection, but enforcement is not as strong as that in ~~China~~the United States. These products may compete with our products and preclinical programs and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

InMany ~~July 2021, the Chinese government provided new guidance on China-based~~ companies ~~raising~~have ~~capital~~encountered ~~outside~~significant ofproblems ~~China,~~in ~~including~~protecting ~~through~~and ~~arrangements~~defending ~~called~~intellectual ~~variable~~property ~~interest~~rights ~~entities~~in ~~(“VIEs”)~~foreign jurisdictions. InThe ~~light~~legal systems of ~~such~~certain ~~developments~~countries, ~~the~~particularly ~~SEC~~certain ~~has~~developing ~~imposed~~countries, ~~enhanced disclosure requirements on China-based companies seeking to register securities with the SEC. Although we~~ do not ~~have~~favor athe ~~VIE~~enforcement ~~structure,~~of ~~due to our Joint Venture~~patents, ~~any~~trade ~~future~~secrets ~~Chinese, U.S. or other rules~~ and ~~regulations that place restrictions on capital raising or~~ other ~~activities~~intellectual ~~may~~property ~~adversely~~protection, ~~affect~~particularly ~~our~~those ~~business~~relating ~~and~~to ~~results~~biotechnology ofproducts, ~~operations.~~which Ifcould ~~the~~make ~~business~~it ~~environment~~difficult infor ~~China~~us ~~deteriorates~~to ~~from~~stop the ~~perspective~~infringement of ~~domestic~~our ~~or international investment~~patents, or if ~~relations~~pursued ~~between China~~ and ~~the~~obtained, ~~United States~~ or ~~other~~marketing ~~governments~~of ~~deteriorate,~~competing ~~the~~products ~~Chinese government may intervene with our operations and our business~~ in ~~China~~violation ~~and United States, as well as the market price~~ of our ~~securities,~~proprietary ~~may~~rights ~~also be adversely affected~~generally.

~~Our~~Proceedings ~~business does not appear~~ to beenforce ~~within the targeted areas of concern by the Chinese government. However, because of~~ our ~~Joint~~patent ~~Venture,~~rights ~~there is a risk that the Chinese government may~~ in ~~the future seek to affect operations of any company with any level of operations in Hong Kong or China, including its ability to offer securities to investors, list its securities on a U.S. or other~~ foreign ~~exchange,~~jurisdictions ~~conduct its business or accept foreign investment. Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations~~ could ~~have~~result ~~a significant impact upon the business that we may be able to conduct~~ in ~~the~~substantial ~~PRC~~costs and ~~accordingly~~divert ~~on the results of~~ our ~~operations~~efforts and ~~financial~~attention ~~condition.~~from Ifother ~~any~~aspects ~~or all~~ of ~~the~~our ~~foregoing were to occur~~business, it could, input ~~turn,~~our ~~result~~patents inat arisk ~~material change in the Company’s operations and/or the value~~ of ~~its~~being ~~common~~invalidated ~~stock and/~~or ~~significantly~~interpreted ~~limit~~narrowly ~~or completely hinder its ability to offer or continue to offer securities to investors~~ and ~~cause~~our ~~the~~patent ~~value~~applications ofat ~~such~~risk ~~securities to significantly decline or be worthless. Furthermore, in the event any~~ of ~~the~~not ~~foregoing~~issuing ~~were to occur or to be interpreted differently, we~~ and ~~the~~could ~~Joint~~provoke ~~Venture~~third ~~will~~parties ~~take any and all actions~~ to ~~remain~~assert inclaims ~~compliance~~against ~~with any such laws or regulations or detailed implementations and interpretations thereof~~us.

~~Changes~~We may not prevail in ~~U.S.~~any lawsuits that we initiate and ~~international~~the ~~trade~~damages ~~policies,~~or ~~particularly~~other ~~with~~remedies ~~respect~~awarded, toif ~~China~~any, may ~~adversely~~not ~~impact~~be commercially meaningful. Accordingly, our ~~business~~efforts ~~and~~to ~~operating~~enforce ~~results~~our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

~~Changes~~Risks toRelated policy implemented by the U.S. Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. Because our manufacturers and suppliers are located in China, we are exposed to ~~the~~Regulatory ~~possibility~~Approval of product supply disruption and increased costs in the event of changes in the policies, laws, rules and regulations of the United States or foreign governments, as well as political unrest or unstable economic conditions in foreign countries. The U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. For example, on February 1, 2025, President Donald Trump signed executive orders imposing a 25% tariff on certain imports from Mexico and Canada, and a 10% tariff on certain imports from China, which were to take effect on February 4, 2025. A 30-day pause was granted to Canada and Mexico but the tariffs did take effect on March 4, 2025. In March 2025, the administration announced plans to impose an additional 10% tariff on certain imports from China. These newly proposed and imposed tariffs have resulted in threatened and actual retaliatory tariffs against U.S. goods. Our ~~components~~Products ~~may in the future be subject to these tariffs, which could increase our manufacturing costs~~ and ~~could~~Other ~~make~~Legal ~~our~~Compliance products, if successfully developed and approved, less competitive than those of our competitors whose inputs are not subject to these tariffs. We may otherwise experience supply disruptions or delays, and our suppliers may not continue to provide us with clinical supply in our required quantities, to our required specifications and quality levels or at attractive prices. In addition, certain Chinese contract manufacturing organizations may become subject to trade restrictions, sanctions, other regulatory requirements, or proposed legislation by the U.S. government, which could restrict or even prohibit our ability to work with such entities, thereby potentially disrupting the supply of material to us. Such disruption could have adverse effects on the development of our product candidates and our business operations.Matters

36Even if we complete the necessary preclinical studies and clinical trials, the regulatory approval process is expensive, time-consuming and uncertain and may prevent us or any future collaborators from obtaining approvals for the commercialization of some or all of our products. As a result, we cannot predict when or if, and in which territories, we, or any future collaborators, will obtain marketing approval to commercialize a product candidate.

~~Risks~~Our ~~Related~~products and the activities associated with their development and commercialization, including their design, research, testing, manufacture, safety, efficacy, quality control, recordkeeping, labelling, packaging, storage, approval, advertising, promotion, sale, distribution, import, export and reporting of safety and other post-market information, are subject to comprehensive regulation by the FDA and other foreign regulatory agencies including the NMPA. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. As a result of the FDA reclassification ruling in December 2019, which impacted the classification of our devices, we had to suspend marketing of our first-Generation medical device for the treatment of anxiety and insomnia. Our ~~Intellectual~~Gen-2 ~~Property~~and Gen-3 devices have completed development and are in the prototype stage of manufacturing and testing. Securing marketing approval from the FDA in the United States requires the submission of extensive testing and clinical data to regulatory authorities for each therapeutic indication to establish the candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Our products may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.

If we are unable to obtain and maintain patent protection for our technologies and products, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technologies and products similar or identical to ours, and our ability to successfully commercialize our technologies and products may be impaired.34

~~Our~~In ~~success~~addition, ~~depends~~changes in ~~large~~marketing ~~part~~approval onpolicies ~~our~~during ~~ability~~the todevelopment ~~obtain~~period, ~~and~~changes ~~maintain patent protection~~ in or the ~~United~~enactment ~~States~~of ~~and~~additional ~~other~~statutes ~~countries~~or ~~with~~regulations ~~respect~~or tochanges ~~our~~in ~~products.~~regulatory Wereview ~~seek~~for toeach ~~protect~~submitted ~~our~~product ~~proprietary~~application ~~position~~may bycause ~~filing~~delays ~~patent applications~~ in the ~~United~~approval ~~States~~or ~~and~~rejection ~~abroad~~of ~~related~~an ~~to our technologies and products~~application. IfRegulatory weauthorities ~~do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage that we may~~ have, ~~which~~substantial ~~could~~discretion ~~harm our business and ability to achieve profitability. To protect our proprietary positions, we file patent applications~~ in the ~~United~~approval ~~States~~process and abroad related to our novel technologies and products that are important to our business. The patent application and prosecution processes are expensive and time-consuming. We and our current licensees, or any future licensors and licensees may ~~not~~refuse ~~be able~~ to ~~file~~accept ~~and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We or our current licensees, or~~ any ~~future~~application ~~licensors~~ or ~~licensees~~ may ~~also~~decide ~~fail~~that ~~to identify patentable aspects of~~ our ~~research~~data ~~and development before it~~ is ~~too~~insufficient ~~late~~for toapproval ~~obtain patent protection. Therefore, these~~ and ~~any~~require ofadditional our patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. It is possible that defects of form in the preparation or filing of our patents or patent applications may existpreclinical, ~~or may arise in the future~~clinical, ~~such as with respect to proper priority claims, inventorship, claim scope~~ or ~~patent~~other ~~term adjustments~~studies. IfIn ~~our current licensees~~addition, orvarying ~~any~~interpretations ~~future~~of ~~licensors~~the ordata ~~licensees,~~obtained ~~are~~from ~~not~~preclinical ~~fully~~and ~~cooperative~~clinical ortesting ~~disagree~~could ~~with~~delay, ~~us as to the prosecution~~limit, ~~maintenance~~ or ~~enforcement of any patent rights, such patent rights could be compromised and we might not be able to~~ prevent ~~third~~marketing ~~parties~~approval ~~from~~of ~~making,~~a ~~using~~product ~~and selling competing products~~candidate. IfAny ~~there~~marketing ~~are~~approval ~~material~~we ~~defects~~ultimately inobtain ~~the~~may ~~form~~be orlimited ~~preparation of our patents~~ or ~~patent~~subject ~~applications,~~to ~~such~~restrictions ~~patents~~ or ~~applications may be invalid and unenforceable. Moreover, our competitors may independently develop equivalent knowledge, methods and know~~post-~~how.~~approval ~~Any~~commitments ofthat ~~these~~render ~~outcomes~~the ~~could~~approved ~~impair~~product ~~our~~not ~~ability~~commercially ~~to prevent competition from third parties~~viable.

~~Changes~~If inwe ~~either~~experience ~~the~~delays ~~patent laws or interpretation of the patent laws~~ in ~~the~~obtaining ~~United~~approval ~~States~~or ~~and~~if ~~other~~we ~~countries~~fail ~~may~~to ~~diminish~~obtain ~~the~~approval ~~value~~ of our ~~patents or narrow the scope of our patent protection. In addition~~products, the ~~laws~~commercial ofprospects ~~foreign~~for ~~countries may not protect~~ our ~~rights~~products ~~to the same extent as the laws of the United States. Furthermore, changes in patent laws in the United States, including the America Invents Act of 2011,~~ may ~~affect~~be ~~the~~harmed ~~scope, strength~~ and ~~enforceability of~~ our ~~patent~~ability ~~rights~~to orgenerate ~~the~~revenues ~~nature~~will ~~of proceedings that may~~ be ~~brought by us related to our patent rights~~impaired.

WeFailure ~~may not be aware of all third-party intellectual property rights potentially relating~~ to ~~our~~obtain ~~current~~marketing ~~and~~approval ~~future products. Publications of discoveries~~ in ~~the~~foreign ~~scientific literature often lag behind the actual discoveries, and patent applications in the United States and other~~ jurisdictions ~~are~~would ~~typically~~prevent ~~not~~our ~~published~~products ~~until~~from ~~eighteen~~being ~~months~~marketed ~~after filing, or~~ in ~~some~~these ~~cases not at all~~territories. ~~Therefore,~~Any weapproval ~~cannot be certain that~~ we ~~were~~are ~~the~~granted ~~first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file~~ for patent protection of such inventions. Similarly, should we own any patents or patent applications in the future, we may not be certain that we were the first to file for patent protection for the inventions claimed in such patents or patent applications. As a result, the issuance, scope, validity and commercial value of our ~~patent~~products rights cannot be predicted with any certainty. Moreover, we may be subject to a third-party pre-issuance submission of prior art to the U.S. Patent and Trademark Office (the “USPTO”), or become involved in ~~opposition, derivation, re-examination, inter partes review or interference proceedings, in~~ the United States orwould ~~elsewhere,~~not ~~challenging~~assure ~~our~~approval ~~patent rights or the patent rights~~ of ~~others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate,~~ our ~~patent rights, allow third parties to commercialize our technology or~~ products ~~and compete directly with us, without payment to us, or result~~ in ~~our~~foreign ~~inability to manufacture or commercialize products without infringing third-party patent rights~~jurisdictions.

~~Our~~To ~~pending~~market and ~~future~~sell ~~patent~~our ~~applications~~products ~~may~~in ~~not~~other ~~result~~jurisdictions, inwe ~~patents~~must ~~being~~obtain ~~issued~~separate ~~that~~marketing ~~protect~~approvals ~~our~~and ~~technology~~comply orwith ~~products,~~numerous inand ~~whole~~varying orregulatory inrequirements. ~~part,~~The orapproval ~~which~~procedure ~~effectively~~varies ~~prevent~~among ~~others~~countries ~~from~~and ~~commercializing~~can ~~competitive~~involve ~~technologies~~additional ~~and products~~testing. ~~Even~~The iftime ~~our~~required ~~patent~~to ~~applications~~obtain ~~issue~~approval asmay ~~patents,~~differ ~~they~~substantially ~~may~~from ~~not~~that ~~issue~~required to obtain approval from the FDA in athe ~~form~~United ~~that~~States. ~~will~~The ~~provide~~regulatory usapproval ~~with~~process ~~any~~outside ~~meaningful~~the ~~protection~~United ~~against~~States ~~competing~~generally ~~products~~includes orall ~~processes~~the ~~sufficient~~risks toassociated ~~achieve~~with ~~our~~obtaining ~~business~~approval ~~objectives~~from the FDA. In addition, ~~prevent~~in ~~competitors~~many ~~from~~countries ~~competing~~outside ~~with~~the usUnited orStates, ~~otherwise~~it ~~provide~~is usrequired ~~with~~that ~~any~~the ~~competitive~~product ~~advantage.~~be ~~Our~~approved ~~competitors~~for ~~may~~reimbursement before the product can be ~~able~~approved tofor ~~circumvent~~sale ~~our~~in ~~owned~~that orcountry. ~~licensed~~We ~~patents~~may bynot ~~developing~~obtain ~~similar~~approvals orfrom ~~alternative~~regulatory ~~technologies~~authorities oroutside ~~products~~the inUnited aStates ~~non-infringing~~on ~~manner.~~a ~~Alternatively~~timely basis, ~~our~~if ~~competitors~~at ~~may~~all. ~~seek~~Approval ~~approval~~by tothe ~~market~~FDA ~~their~~does ~~own~~not ~~products~~ensure ~~similar~~approval toby orregulatory ~~otherwise~~authorities ~~competitive~~in ~~with~~other ~~our~~countries ~~products.~~or Injurisdictions, ~~these~~and ~~circumstances,~~approval weby ~~may~~one ~~need~~regulatory toauthority ~~defend~~outside ~~and/or~~the ~~assert~~United ~~our~~States ~~patents,~~does ~~including~~not ensure approval by ~~filing~~regulatory ~~lawsuits~~authorities ~~alleging~~in ~~patent~~other ~~infringement.~~countries Inor ~~any~~jurisdictions ofor ~~these~~by ~~types~~the ofFDA. ~~proceedings~~However, afailure ~~court~~to orobtain ~~other~~approval ~~agency~~in ~~with~~one jurisdiction may ~~find~~impact our ~~patents~~ability ~~invalid~~to obtain approval elsewhere. We may not be able to file for marketing approvals and~~/or~~ ~~unenforceable~~may not receive necessary approvals to commercialize our products in any market.

37The U.S. FDA, Chinese National Medical Products Administration and other comparable foreign regulatory authorities may not accept data from trials conducted in locations outside of their jurisdiction.

~~The~~In ~~issuance~~addition ofto aclinical ~~patent~~trials isconducted ~~not~~in ~~conclusive~~the asUnited toStates, ~~its~~we ~~inventorship~~have chosen, ~~scope~~and may continue to choose, ~~validity~~to orconduct ~~enforceability~~international clinical trials. The acceptance of study data by the FDA, ~~and~~NMPA ~~our~~or ~~owned~~other ~~and~~comparable ~~licensed~~foreign ~~patents~~regulatory authority from clinical trials conducted outside of their respective jurisdictions may be ~~challenged~~subject into certain conditions. In cases where data from foreign clinical trials are intended to serve as the ~~courts~~basis orfor ~~patent~~marketing ~~offices~~approval in the United States, ~~and~~the ~~abroad.~~FDA ~~Such~~will ~~challenges~~generally ~~may~~not ~~result~~approve inthe ~~loss~~application on the basis of ~~exclusivity~~foreign ordata ~~freedom~~alone unless (1) the data are applicable to ~~operate~~the orUnited inStates ~~patent~~population ~~claims~~and ~~being~~United ~~narrowed,~~States ~~invalidated~~medical orpractice; ~~held~~(2) ~~unenforceable,~~the intrials ~~whole~~are orperformed inby ~~part,~~clinical ~~which~~investigators ~~could~~of ~~limit~~recognized ~~our~~competence ~~ability~~and pursuant to ~~stop~~Current ~~others~~Good ~~from~~Clinical ~~using~~Practice orrequirements; ~~commercializing~~and ~~similar~~(3) orthe ~~identical~~FDA ~~technologies~~is ~~and~~able ~~products,~~to validate the data through an on-site inspection or ~~limit~~other appropriate means. The FDA may accept the ~~duration~~use of some foreign data to support a marketing approval if the ~~patent~~clinical ~~protection~~trial meets certain requirements. Additionally, the FDA’s clinical trial requirements, including the adequacy of ~~our~~the ~~technologies~~subject population studied and ~~products.~~statistical Inpowering, ~~addition~~must be met. Furthermore, ~~given~~such foreign trials would be subject to the ~~amount~~applicable local laws of ~~time~~the ~~required~~foreign ~~for~~jurisdictions where the ~~development~~trials are conducted. There can be no assurance that the FDA, ~~testing~~NMPA ~~and~~or any applicable foreign regulatory ~~review~~authority will accept data from trials conducted outside of ~~new~~its ~~products~~respective jurisdiction. If the FDA, ~~patents~~NMPA ~~protecting~~or ~~such~~any ~~candidates~~applicable ~~might~~foreign ~~expire~~regulatory ~~before~~authority ordoes ~~shortly~~not ~~after~~accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our product candidates ~~are~~not ~~commercialized~~receiving approval for commercialization in the applicable jurisdiction.

~~We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and unsuccessful.~~35

~~Competitors~~Even ~~may~~if ~~infringe our issued patents, trademarks, copyrights or other intellectual property. To counter infringement or unauthorized use,~~ we ~~may~~obtain bemarketing ~~required~~approvals tofor ~~file~~our ~~infringement claims~~products, ~~which can be expensive and time-consuming and divert~~ the ~~time~~terms ~~and attention~~ of ~~our~~approvals ~~management~~ and ~~scientific~~ongoing ~~personnel.~~regulation Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, trademarks, copyrights or other intellectual property. In addition, in a patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our ~~patents~~products domay ~~not cover the invention. An adverse outcome in a litigation or proceeding involving our patents could~~ limit ~~our~~how ~~ability~~we tomanufacture ~~assert our patents against those parties or other competitors~~ and ~~may~~market ~~curtail or preclude~~ our ~~ability~~products ~~to exclude third parties from making~~ and ~~selling~~compliance ~~similar~~with orsuch ~~competitive~~requirements ~~products. Similarly, if we assert trademark infringement claims, a court~~ may ~~determine~~involve ~~that~~substantial ~~the marks we have asserted are invalid or unenforceable~~resources, orwhich ~~that~~could ~~the~~materially ~~party~~impair ~~against~~our ~~whom~~ability ~~we have asserted trademark infringement has superior rights~~ to ~~the~~generate ~~marks in question~~revenue. ~~In this case, we could ultimately be forced to cease use of such trademarks.~~

InEven ~~any~~if ~~infringement~~marketing ~~litigation,~~approval ~~any award~~ of ~~monetary~~a ~~damages~~product wecandidate ~~receive~~is ~~may~~granted, ~~not~~an beapproved ~~commercially~~product ~~valuable.~~and ~~Furthermore,~~its ~~because~~manufacturer ofand ~~the~~marketer ~~substantial~~are ~~amount~~subject ofto ~~discovery~~ongoing ~~required~~review inand ~~connection~~extensive ~~with~~regulation, ~~intellectual~~including ~~property~~the ~~litigation,~~potential ~~there~~requirements isto implement a risk ~~that~~evaluation ~~some~~and ofmitigation ~~our~~strategy ~~confidential~~or ~~information~~to ~~could~~conduct becostly ~~compromised~~post-marketing bystudies ~~disclosure~~or ~~during~~clinical ~~litigation.~~trials Inand ~~addition,~~surveillance ~~there~~to ~~could~~monitor bethe ~~public~~safety ~~announcements~~or efficacy of the ~~results~~product. ofWe ~~hearings,~~must ~~motions~~also orcomply ~~other~~with ~~interim~~requirements ~~proceedings~~concerning oradvertising ~~developments~~ and ifpromotion ~~securities~~for ~~analysts~~any orof ~~investors~~our ~~perceive~~products ~~these~~for ~~results~~which towe beobtain ~~negative,~~marketing itapproval. ~~could~~Promotional ~~have~~communications aare ~~substantial~~subject ~~adverse~~to ~~effect~~a onvariety ~~the price~~ of ~~our~~legal ~~common~~and ~~stock.~~regulatory ~~Moreover,~~restrictions ~~there~~and ~~can~~must be noconsistent ~~assurance~~with ~~that~~the weinformation ~~will~~in ~~have~~the ~~sufficient~~product’s ~~financial~~approved orlabelling. ~~other~~Thus, ~~resources~~we towill ~~file~~not ~~and~~be ~~pursue~~able ~~such~~to ~~infringement~~promote ~~claims,~~any ~~which~~products ~~typically~~we ~~last~~develop for ~~years~~indications ~~before~~or ~~they~~uses ~~are~~for ~~concluded.~~which ~~Some~~they ofare ~~our~~not ~~competitors~~approved. ~~may~~In beaddition, ~~able~~manufacturers toof ~~sustain~~approved ~~the~~products ~~costs~~and ofthose ~~such~~manufacturers’ ~~litigation~~facilities orare ~~proceedings~~required ~~more~~to ~~effectively~~comply ~~than~~with weextensive ~~can~~FDA ~~because~~requirements ofincluding ~~their~~ensuring ~~greater~~quality ~~financial~~control ~~resources~~ and ~~more~~manufacturing ~~mature~~procedures, ~~and~~which ~~developed~~include ~~intellectual~~requirements ~~property~~relating ~~portfolios.~~to ~~Even~~quality ifcontrol weand ~~ultimately~~quality ~~prevail~~assurance inas ~~such~~well ~~claims,~~as the ~~monetary~~corresponding ~~cost~~maintenance of ~~such~~records ~~litigation~~ and ~~the~~documentation ~~diversion~~and ofreporting ~~the~~requirements. ~~attention~~We ofand our ~~management~~contract ~~and~~manufacturers ~~scientific~~could ~~personnel~~be ~~could~~subject ~~outweigh~~to ~~any~~periodic ~~benefit~~unannounced weinspections ~~receive~~by asthe aFDA ~~result~~to ofmonitor ~~the~~and ~~proceedings~~ensure compliance.

~~Accordingly~~Our employees, ~~despite~~independent ~~our efforts~~contractors, weprincipal ~~may~~investigators, ~~not be able to prevent third parties from infringing~~consultants, ~~misappropriating~~commercial orpartners ~~successfully challenging our intellectual property rights. Uncertainties resulting from the initiation~~ and ~~continuation~~vendors ofmay ~~patent~~engage ~~litigation~~in misconduct or other ~~proceedings~~improper ~~could~~activities, ~~have~~including anon-compliance ~~negative~~with ~~impact~~regulatory onstandards ~~our~~and ~~ability to compete in the marketplace~~requirements.

~~Third~~We ~~parties~~are ~~may~~exposed ~~initiate~~to ~~legal~~the ~~proceedings~~risk ~~alleging~~of ~~that~~employee fraud or other misconduct or failure to comply with applicable regulatory requirements. Misconduct by employees and independent contractors, such as principal investigators, consultants, commercial partners and vendors, could include failures to comply with regulations of the FDA and other comparable regulatory authorities, to provide accurate information to such regulators, to comply with manufacturing standards we have established, to comply with healthcare fraud and abuse laws, to report financial information or data accurately or to disclose unauthorized activities to us. In particular, sales, marketing and other business arrangements in the healthcare industry are ~~infringing~~subject ~~their~~to ~~intellectual~~extensive ~~property~~laws ~~rights~~intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws may restrict or prohibit a wide range of business activities, including, but not limited to, research, manufacturing, distribution, pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee and independent contractor misconduct could also involve the ~~outcome~~improper use of individually identifiable information, including, without limitation, information obtained in the course of clinical trials, which ~~would~~could beresult ~~uncertain~~in regulatory sanctions and serious harm to our reputation. In addition, federal procurement laws impose substantial penalties for misconduct in connection with government contracts and require certain contractors to maintain a code of business ethics and conduct. It is not always possible to identify and deter employee and independent contractor misconduct, and any precautions we take to detect and prevent improper activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws. If any such actions are instituted against us, those actions could ~~significantly~~have ~~harm~~a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting or oversight obligations if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with the law and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate.

Our commercial success depends, in part, on our ability to develop, manufacture, market and sell our products and use our proprietary technologies without infringing the intellectual property and other proprietary rights of third parties.36

~~There~~Our iscurrent ~~potential~~and ~~for~~future arelationships ~~substantial~~with ~~amount~~healthcare ~~of intellectual property litigation in our industry~~professionals, ~~and~~principal ~~we may become party to~~investigators, ~~or threatened with~~consultants, ~~litigation~~customers orand ~~other~~third-party ~~adversarial~~payors ~~proceedings~~in ~~regarding~~the ~~intellectual~~United ~~property~~States ~~rights~~and ~~with~~elsewhere ~~respect~~may tobe ~~our~~subject, ~~technology~~directly or ~~products~~indirectly, ~~including~~to ~~interference~~applicable ~~proceedings~~anti-kickback, ~~before~~fraud ~~the~~and ~~USPTO.~~abuse, ~~Intellectual~~false ~~property~~claims, ~~disputes~~physician ~~arise~~payment intransparency, ahealth ~~number~~information ofprivacy ~~areas~~and ~~including~~security ~~with~~and ~~respect to patents, use of~~ other ~~proprietary~~healthcare ~~rights~~laws and ~~the~~regulations, ~~contractual~~which ~~terms~~could ofexpose ~~license arrangements. Third parties may assert claims against~~ us ~~based on existing or future intellectual property rights. The outcome of intellectual property litigation is subject~~ to ~~uncertainties that cannot be adequately quantified in advance~~penalties.

IfHealthcare weproviders, ~~are~~physicians, ~~found~~clinicians, toand ~~infringe~~third-party payors in the United States and elsewhere will play a ~~third~~primary ~~party’s~~role ~~intellectual~~in ~~property~~the ~~rights,~~recommendation and prescription of any products for which we ~~could~~obtain bemarketing ~~forced,~~approval. ~~including~~Our bycurrent ~~court~~and ~~order~~future arrangements with healthcare professionals, principal investigators, consultants, customers and third-party payors may expose us to ~~cease~~broadly ~~developing~~applicable fraud and abuse and other healthcare laws, ~~manufacturing~~including, orwithout ~~commercializing~~limitation, the ~~infringing~~federal ~~product~~Anti-Kickback ~~candidate~~Statute and the federal False Claims Act, that may constrain the business or ~~product~~financial arrangements and relationships through which we research, sell, market and distribute any products for which we obtain marketing approval. ~~Alternatively~~In addition, we may be ~~required~~subject to ~~obtain~~physician apayment ~~license~~transparency ~~from~~laws ~~such~~and ~~third~~patient ~~party~~privacy inand ~~order~~security toregulation ~~use~~by the ~~infringing~~federal ~~technology~~government and ~~continue~~by ~~developing,~~the ~~manufacturing~~states orand ~~marketing~~foreign ~~the~~jurisdictions ~~infringing~~in ~~product~~which ~~candidate~~we conduct our business. The applicable federal, state and foreign healthcare laws that may affect our ability to operate include the following:

38● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under federal and state healthcare programs such as Medicare and Medicaid;

~~However,~~● wefederal ~~may~~civil ~~not~~and becriminal ~~able~~false toclaims ~~obtain~~laws, ~~any~~including ~~required~~the ~~license~~federal onFalse ~~commercially~~Claims ~~reasonable~~Act, ~~terms~~which orimpose atcriminal ~~all.~~and ~~Even~~civil ifpenalties, weincluding ~~were~~through ~~able~~civil towhistle ~~obtain~~blower aor ~~license,~~qui ittam ~~could~~actions, beagainst ~~non-exclusive,~~individuals ~~thereby~~or ~~giving~~entities ~~our~~for, ~~competitors~~among ~~access~~other tothings, ~~the~~knowingly ~~same~~presenting, ~~technologies~~or ~~licensed~~causing to ~~us.~~be ~~In addition~~presented, weto ~~could~~the befederal ~~found liable for monetary damages~~government, including ~~treble~~the ~~damages~~Medicare and ~~attorneys’~~Medicaid ~~fees~~programs, ifclaims wefor payment that are ~~found~~false toor ~~have~~fraudulent ~~willfully~~or ~~infringed~~making a ~~patent.~~false Astatement ~~finding~~to ofavoid, ~~infringement~~decrease ~~could~~or ~~prevent~~conceal usan ~~from~~obligation ~~commercializing~~to ~~our~~pay ~~products~~money ~~or force us~~ to ~~cease some of our business operations. Claims that we have misappropriated~~ the ~~confidential~~federal ~~information or trade secrets of third parties could have a similar negative effect on our business.~~government;

If● wethe ~~are~~civil ~~unable~~monetary topenalties ~~protect~~statute, ~~the~~which ~~confidentiality~~imposes ofpenalties ~~our~~against ~~trade~~any ~~secrets~~person or entity who, ~~our~~among ~~business~~other ~~and~~things, ~~competitive~~is ~~position~~determined ~~would~~to have presented or caused to be ~~harmed.~~presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent;

In● ~~addition~~the tofederal ~~seeking~~Health ~~patent~~Insurance Portability and ~~trademark~~Accountability ~~protection~~Act ~~for~~of ~~our products~~1996, weor ~~also~~HIPAA, ~~rely~~which oncreated ~~trade~~additional ~~secrets,~~federal ~~including~~criminal ~~unpatented~~statutes ~~know-how,~~that ~~technology~~prohibit knowingly and ~~other~~willfully ~~proprietary information~~executing, toor ~~maintain~~attempting ~~our~~to ~~competitive~~execute, ~~position.~~a Wescheme ~~seek~~ to ~~protect~~defraud ~~our~~any ~~trade~~healthcare ~~secrets,~~benefit inprogram ~~part~~or obtain, by ~~entering~~means ~~into~~of ~~non-disclosure~~false ~~and~~or ~~confidentiality~~fraudulent ~~agreements with parties who have access to them~~pretenses, ~~such~~representations asor ~~our employees~~promises, ~~corporate~~any ~~collaborators,~~of ~~outside~~the ~~scientific~~money ~~collaborators,~~or ~~contract~~property ~~manufacturers,~~owned ~~consultants~~by, ~~advisors~~or ~~and~~under ~~other~~the ~~third~~custody ~~parties. We also enter into confidentiality and invention~~ or ~~patent~~control ~~assignment~~of, ~~agreements~~any ~~with~~healthcare ~~our~~benefit ~~employees and consultants. Despite these efforts~~program, ~~any~~regardless of ~~these~~whether ~~parties may breach~~ the ~~agreements~~payor ~~and~~is ~~disclose~~public ~~our~~or ~~proprietary information~~private, ~~including~~knowingly ~~our~~and ~~trade~~willfully ~~secrets.~~embezzling ~~Monitoring~~or ~~unauthorized~~stealing ~~uses~~from ~~and~~a ~~disclosures~~health ofcare ~~our~~benefit ~~intellectual property is difficult~~program, ~~and~~willfully weobstructing doa ~~not~~criminal ~~know~~investigation ~~whether~~of ~~the~~a ~~steps~~health wecare ~~have~~offense ~~taken~~and toknowingly ~~protect~~and ~~our~~willfully ~~intellectual property will be effective. In addition~~falsifying, weconcealing ~~may~~or ~~not~~covering beup ~~able~~by ~~to obtain adequate remedies for~~ any ~~such~~trick ~~breaches.~~or ~~Enforcing~~device a ~~claim~~material ~~that~~fact ~~a party illegally disclosed~~ or ~~misappropriated~~making aany ~~trade~~materially ~~secret~~false isstatements ~~difficult,~~in ~~expensive~~connection ~~and~~with ~~time-consuming, and~~ the ~~outcome~~delivery isof, ~~unpredictable.~~or Inpayment ~~addition~~for, ~~some~~healthcare ~~courts~~benefits, ~~inside~~items ~~and outside the United States are less willing~~ or ~~unwilling~~services relating to ~~protect~~healthcare ~~trade secrets.~~matters;

~~Moreover,~~● ~~our competitors may independently develop knowledge~~HIPAA, ~~methods~~as ~~and~~amended ~~know-how~~by ~~equivalent~~the toHealth ~~our~~Information ~~trade~~Technology ~~secrets.~~for ~~Competitors~~Economic ~~could purchase our products~~ and ~~replicate~~Clinical ~~some~~Health orAct ~~all~~ of ~~the~~2009, ~~competitive~~or ~~advantages~~HITECH, weand ~~derive~~their ~~from~~respective ~~our~~implementing ~~development~~regulations, ~~efforts~~which ~~for~~impose ~~technologies~~obligations on ~~which~~“covered weentities,” doincluding ~~not~~certain ~~have~~healthcare ~~patent~~providers, ~~protection.~~health Ifplans, ~~any~~and ofhealthcare ~~our~~clearinghouses, ~~trade~~as ~~secrets~~well ~~were~~as totheir berespective ~~lawfully~~“business ~~obtained~~associates” orthat ~~independently~~create, ~~developed by a competitor~~receive, wemaintain ~~would~~or ~~have~~transmit noindividually ~~right~~identifiable tohealth ~~prevent~~information ~~them,~~for or ~~those~~on tobehalf ~~whom~~of ~~they~~a ~~communicate~~covered itentity, ~~from using that technology or information to compete~~ with ~~us.~~respect ~~If any of our trade secrets were~~ to besafeguarding ~~disclosed~~the toprivacy, orsecurity ~~independently~~and ~~developed~~transmission byof aindividually ~~competitor,~~identifiable ~~our~~health ~~competitive position would be harmed.~~information;

~~We may not be able to protect our intellectual property rights throughout the world.~~37

~~Filing,~~● ~~prosecuting~~the ~~and~~federal ~~defending~~Physician ~~patents~~Payments onSunshine ~~products~~Act, increated ~~all~~under ~~countries~~Section ~~throughout~~6002 ~~the~~of ~~world~~Patient ~~would~~Protection ~~be prohibitively expensive,~~ and ~~our~~Affordable ~~intellectual~~Care ~~property~~Act, ~~rights~~as inamended ~~some~~by ~~countries outside~~ the ~~United~~Health ~~States~~Care ~~could~~and beEducation ~~less~~Reconciliation ~~extensive~~Act, ~~than~~or ~~those~~collectively, in the ~~United~~“ACA,” ~~States.~~and Inits ~~some~~implementing ~~cases~~regulations, wecreated ~~may~~annual ~~not~~reporting berequirements ~~able to obtain patent protection~~ for ~~certain~~manufacturers ~~licensed~~of ~~technology~~products, ~~outside the United States. In addition~~devices, ~~the~~biologicals ~~laws~~and ofmedical ~~some~~supplies ~~foreign~~for ~~countries~~certain dopayments ~~not~~and ~~protect~~“transfers ~~intellectual~~of ~~property~~value” ~~rights~~provided to ~~the~~physicians ~~same extent as federal~~ and ~~state~~teaching ~~laws in the United States~~hospitals, ~~even~~as inwell ~~jurisdictions~~as ~~where~~ownership weand doinvestment ~~pursue~~interests ~~patent~~held ~~protection.~~by ~~Consequently,~~physicians we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, even in jurisdictions where we do pursue patent protection or from selling or importing products made using our inventions in and ~~into~~their ~~the~~immediate ~~United~~family ~~States~~members; ~~or other jurisdictions.~~and

~~Competitors~~● ~~may~~analogous ~~use~~state ~~our~~and ~~technologies~~foreign inlaws, ~~jurisdictions~~such ~~where~~as westate ~~have~~anti-kickback ~~not~~and ~~pursued~~false ~~and~~claims ~~obtained~~laws, ~~patent~~which ~~protection~~may apply to ~~develop~~sales ~~their~~or ~~own~~marketing ~~products~~arrangements and, ~~further~~claims involving healthcare items or services reimbursed by non-governmental third-party payors, ~~may~~including ~~export~~private ~~otherwise~~insurers; ~~infringing~~state ~~products~~and foreign laws that require companies to ~~territories~~comply ~~where~~with wevoluntary ~~have~~compliance ~~patent~~guidelines ~~protection,~~and ~~but~~the ~~enforcement~~relevant iscompliance ~~not~~guidance aspromulgated ~~strong~~by the federal government or to adopt compliance programs as ~~that~~prescribed inby ~~the~~state ~~United~~laws ~~States.~~and ~~These~~regulations, ~~products~~or that otherwise restrict payments that may ~~compete~~be ~~with~~made ~~our~~to ~~products~~healthcare providers; state and ~~preclinical~~foreign ~~programs~~laws ~~and~~that ~~our~~require ~~patents~~manufacturers orto report information related to payments and other ~~intellectual~~transfers ~~property~~of ~~rights~~value ~~may~~to ~~not~~physicians beand ~~effective~~other healthcare providers or ~~sufficient~~marketing toexpenditures; ~~prevent~~and ~~them~~state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from ~~competing~~each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.

~~Many~~Further, ~~companies~~the ~~have~~ACA, ~~encountered~~among ~~significant~~other ~~problems~~things, inamended ~~protecting~~the ~~and~~intent ~~defending~~requirement ~~intellectual~~of ~~property~~the ~~rights~~federal inAnti-Kickback ~~foreign~~Statute ~~jurisdictions.~~and ~~The~~certain ~~legal~~criminal ~~systems~~statutes ofgoverning ~~certain~~healthcare ~~countries,~~fraud. ~~particularly~~A ~~certain~~person ~~developing~~or ~~countries,~~entity dono ~~not~~longer ~~favor~~needs ~~the~~to ~~enforcement~~have actual knowledge of ~~patents,~~the ~~trade~~statute ~~secrets~~or ~~and~~specific ~~other~~intent ~~intellectual~~to ~~property~~violate ~~protection~~it. In addition, ~~particularly~~the ~~those~~ACA ~~relating~~provided tothat ~~biotechnology~~the ~~products,~~government ~~which~~may ~~could~~assert ~~make~~that ita ~~difficult~~claim ~~for~~including usitems toor ~~stop~~services ~~the~~resulting ~~infringement~~from ofa ~~our~~violation ~~patents,~~of ifthe ~~pursued~~federal ~~and~~Anti-Kickback ~~obtained,~~Statute orconstitutes ~~marketing~~a offalse ~~competing~~or ~~products~~fraudulent inclaim ~~violation~~for purposes of ~~our~~the ~~proprietary~~False ~~rights~~Claims ~~generally~~Act.

~~Proceedings~~Efforts to ~~enforce~~ensure that our ~~patent~~future ~~rights~~business inarrangements ~~foreign~~with ~~jurisdictions~~third ~~could~~parties ~~result~~will incomply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and ~~divert~~abuse or other healthcare laws. If our ~~efforts~~operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and ~~attention~~administrative penalties, including, without limitation, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other ~~aspects~~federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting or oversight obligations if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with the law and curtailment or restructuring of our ~~business~~operations, any of which could ~~put~~adversely affect our ~~patents~~ability atto ~~risk~~operate our business and pursue our strategy. If any of ~~being~~the ~~invalidated~~physicians or ~~interpreted~~other ~~narrowly~~healthcare ~~and~~providers ~~our~~or ~~patent~~entities ~~applications~~with atwhom ~~risk~~we ofexpect to do business, including future collaborators, are found not ~~issuing~~to ~~and~~comply ~~could~~with ~~provoke~~applicable ~~third~~laws, ~~parties~~they may be subject to ~~assert~~criminal, ~~claims~~civil ~~against~~or usadministrative sanctions, including exclusions from participation in government healthcare programs, which could also affect our business.

WeRecently ~~may~~enacted ~~not~~and ~~prevail~~future inlegislation ~~any~~may ~~lawsuits~~increase ~~that~~the wedifficulty ~~initiate~~ and ~~the~~cost ~~damages~~for orus ~~other~~and ~~remedies awarded, if any, may not be commercially meaningful. Accordingly,~~ our ~~efforts~~collaborators to ~~enforce~~obtain ~~our~~marketing ~~intellectual~~approval ~~property~~of ~~rights~~and ~~around~~commercialize ~~the~~our ~~world~~products ~~may~~and beaffect ~~inadequate to obtain a significant commercial advantage from~~ the ~~intellectual~~prices ~~property that~~ we ~~develop~~may ~~or license~~obtain.

39In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent, alter or delay marketing approval of our existing or future products, restrict or regulate post-approval activities and affect our ability to profitably sell any products for which we obtain marketing approval.

~~Risks~~Among ~~Related~~policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. For example, the ACA, which was enacted in the United States in March 2010, includes measures to ~~Regulatory~~change ~~Approval~~health care delivery, decrease the number of ~~Our~~individuals ~~Products~~without insurance, ensure access to certain basic health care services and ~~Other~~contain ~~Legal~~the ~~Compliance~~rising ~~Matters~~cost of care. The healthcare reform movement, including the enactment of the ACA, has significantly changed health care financing by both governmental and private insurers in the United States. With respect to pharmaceutical manufacturers, the ACA increased the number of individuals with access to health care coverage, but it simultaneously imposed, among other things, increased liability for rebates and discounts owed to certain entities and government health care programs, and new transparency reporting requirements under the Physician Payments Sunshine Act.

Even if we complete the necessary preclinical studies and clinical trials, the regulatory approval process is expensive, time-consuming and uncertain and may prevent us or any future collaborators from obtaining approvals for the commercialization of some or all of our products. As a result, we cannot predict when or if, and in which territories, we, or any future collaborators, will obtain marketing approval to commercialize a product candidate.38

~~Our~~Since ~~products~~its ~~and the activities associated with their development and commercialization~~enactment, ~~including~~there ~~their~~have ~~design,~~been ~~research,~~judicial ~~testing, manufacture, safety, efficacy, quality control, recordkeeping, labelling, packaging, storage, approval, advertising, promotion, sale, distribution, import, export~~ and ~~reporting~~Congressional ofchallenges ~~safety and other post-market information, are subject~~ to ~~comprehensive~~certain ~~regulation~~aspects by the FDA and other foreign regulatory agencies including the NMPA. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. As a result of the ~~FDA reclassification ruling in December 2019~~ACA, ~~which~~as ~~impacted~~well ~~the~~as ~~classification~~efforts ofto ~~our~~repeal ~~devices,~~or wereplace ~~had~~certain toaspects ~~suspend marketing~~ of ~~our first-Generation medical device for~~ the ~~treatment of anxiety and insomnia~~ACA. We ~~are~~continue ~~presently communicating with the FDA with regard~~ to ~~amending~~evaluate ~~our previous 510(k) Application for~~ the ~~treatment~~effect ofthat ~~anxiety and insomnia with our Gen-1 device in accordance with~~ the ~~FDA~~ACA ~~ruling. Our Gen-2~~ and ~~Gen-3~~its ~~devices~~possible ~~have~~repeal ~~completed development~~ and ~~are~~replacement inhas ~~the~~on ~~prototype~~our ~~stage of manufacturing and testing~~business. ~~Securing~~It ~~marketing~~is ~~approval~~uncertain ~~from~~ the ~~FDA~~extent ~~in the United States requires the submission of extensive testing and clinical data~~ to ~~regulatory~~which ~~authorities~~any ~~for~~such ~~each~~changes therapeutic indication to establish the candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Our products may ~~not~~impact ~~be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude~~ our ~~obtaining~~business ~~marketing approval~~ or ~~prevent~~financial ~~or limit commercial use~~condition.

In addition to the ACA, ~~changes~~other infederal ~~marketing~~health ~~approval~~reform ~~policies~~measures ~~during~~have been proposed and adopted in the ~~development~~United ~~period~~States. For example, ~~changes~~legislation inhas orbeen enacted to reduce the ~~enactment~~level of ~~additional~~reimbursement ~~statutes~~paid orto ~~regulations~~providers orunder ~~changes~~the Medicare program over time, as well as phase in ~~regulatory~~alternative ~~review~~payment models for ~~each~~provider ~~submitted~~services ~~product~~under ~~application~~the ~~may~~Medicare ~~cause~~program ~~delays~~with in the ~~approval~~goal orof ~~rejection~~incentivizing the attainment of anpre-defined ~~application~~quality measures. ~~Regulatory~~As ~~authorities~~these ~~have~~measures ~~substantial~~are ~~discretion~~not fully in ~~the~~effect, ~~approval~~and ~~process~~since ~~and~~the ~~may~~U.S. ~~refuse~~Congress tocould ~~accept~~intervene ~~any~~to ~~application~~prevent ortheir ~~may~~full ~~decide~~implementation, ~~that~~at ~~our~~this ~~data~~time, it is ~~insufficient~~unclear ~~for~~how ~~approval~~payment ~~and~~reductions ~~require~~or ~~additional~~the ~~preclinical,~~introduction ~~clinical,~~of orthe ~~other~~quality ~~studies.~~payment Inprogram ~~addition,~~will ~~varying~~impact ~~interpretations~~overall ofphysician reimbursement under the ~~data~~Medicare ~~obtained~~program. ~~from~~It ~~preclinical~~is also unclear if changes in Medicare payments to providers would impact such providers’ willingness to prescribe and ~~clinical~~administer ~~testing~~our ~~could~~existing ~~delay~~or future products, ~~limit~~if approved. Further, orthere ~~prevent~~has ~~marketing~~been ~~approval~~heightened ofgovernmental ascrutiny ~~product~~over ~~candidate~~the manner in which companies set prices for their marketed products. ~~Any~~For ~~marketing~~example, ~~approval~~there wehave ~~ultimately~~been ~~obtain~~several ~~may~~recent beCongressional ~~limited~~inquiries orand ~~subject~~proposed toand ~~restrictions~~enacted orfederal ~~post-approval~~and ~~commitments~~state ~~that~~legislation ~~render~~designed to, among other things, review the ~~approved~~relationship ~~product~~between ~~not~~pricing ~~commercially~~and ~~viable~~patient programs, and reform government program reimbursement methodologies for products.

IfWe weexpect ~~experience~~that ~~delays~~the inACA, ~~obtaining~~as ~~approval~~well oras ifother wehealthcare ~~fail~~reform tomeasures ~~obtain~~that ~~approval~~may ofbe ~~our~~adopted ~~products~~in the future, may result in more rigorous coverage criteria and in additional downward pressure on the ~~commercial~~price ~~prospects~~that we receive for ~~our~~any ~~products~~approved product. Any reduction in reimbursement from Medicare or other government programs may beresult ~~harmed~~in ~~and~~a ~~our~~similar ~~ability~~reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate ~~revenues~~revenue, ~~will~~attain beprofitability ~~impaired~~or commercialize our products.

~~Failure~~Legislative toand ~~obtain~~regulatory ~~marketing~~proposals have been made to expand post-approval inrequirements ~~foreign~~and ~~jurisdictions~~restrict ~~would~~sales ~~prevent~~and ~~our~~promotional activities for products. ~~from~~We ~~being~~cannot ~~marketed~~be insure ~~these~~whether ~~territories.~~additional ~~Any~~legislative ~~approval~~changes wewill ~~are~~be ~~granted~~enacted, ~~for~~or ~~our~~whether ~~products~~the inFDA regulations, guidance or interpretations will be changed, or what the ~~United~~impact ~~States~~of ~~would~~such ~~not~~changes ~~assure~~on ~~approval~~the marketing approvals of our products, inif ~~foreign~~any, ~~jurisdictions~~may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labelling and post-marketing testing and other requirements.

ToOur ~~market~~business ~~and~~activities sell our products in China and any other jurisdictions, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may ~~differ~~be ~~substantially~~subject ~~from that required~~ to ~~obtain approval from~~ the ~~FDA in the United States~~U.S. ~~The~~Foreign ~~regulatory~~Corrupt ~~approval~~Practices ~~process~~Act, ~~outside~~or ~~the~~FCPA, ~~United~~and ~~States~~similar ~~generally~~anti-bribery ~~includes~~and ~~all~~anti-corruption ~~the~~laws ~~risks~~of ~~associated~~other ~~with~~countries ~~obtaining approval from the FDA. In addition,~~ in ~~many~~which ~~countries~~we ~~outside the United States~~operate, itas iswell ~~required~~as ~~that the product be approved for reimbursement before the product can be approved for sale in that country~~U.S. Weand ~~may~~foreign ~~not~~export ~~obtain approvals from regulatory authorities outside the United States on a timely basis~~controls, iftrade atsanctions ~~all.~~and ~~Approval~~import bylaws ~~the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions,~~ and ~~approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA~~regulations. ~~However,~~Compliance ~~failure~~with tothese ~~obtain~~legal ~~approval~~requirements incould ~~one~~limit ~~jurisdiction may impact~~ our ability to ~~obtain~~compete ~~approval~~in ~~elsewhere.~~foreign Wemarkets ~~may not be able to file for marketing approvals~~ and ~~may~~subject ~~not~~us ~~receive necessary approvals~~ to ~~commercialize~~liability ~~our~~if ~~products~~we inviolate ~~any market~~them.

40If we further expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate. Our business activities may be subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate. The FCPA generally prohibits companies and their employees and third-party intermediaries from offering, promising, giving or authorizing the provision of anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action or otherwise obtain or retain business. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, hospitals owned and operated by the government and doctors and other hospital employees would be considered foreign officials under the FCPA. Recently the SEC and DOJ have increased their FCPA enforcement activities with respect to biotechnology and pharmaceutical companies. There is no certainty that all our employees, agents or contractors, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, disgorgement and other sanctions and remedial measures and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international activities, our ability to attract and retain employees and our business, prospects, operating results and financial condition.

~~The U.S. FDA, Chinese National Medical Products Administration and other comparable foreign regulatory authorities may not accept data from trials conducted in locations outside of their jurisdiction.~~39

In addition, toour ~~clinical~~products ~~trials~~and ~~conducted~~technology inmay ~~the~~be ~~United~~subject ~~States,~~to weU.S. ~~have chosen,~~ and ~~may~~foreign ~~continue~~export ~~to choose~~controls, totrade ~~conduct~~sanctions ~~international~~and ~~clinical~~import ~~trials~~laws and regulations. ~~The~~Governmental ~~acceptance~~regulation of ~~study data by~~ the ~~FDA,~~import ~~NMPA~~ or ~~other~~export ~~comparable~~of ~~foreign~~our ~~regulatory~~products ~~authority~~and ~~from~~technology, ~~clinical~~or ~~trials~~our ~~conducted~~failure ~~outside~~to ofobtain ~~their~~any ~~respective~~required ~~jurisdictions~~import ~~may~~or beexport ~~subject~~authorization tofor ~~certain~~our ~~conditions.~~products, Inwhen ~~cases~~applicable, ~~where~~could ~~data~~harm ~~from~~our ~~foreign~~international ~~clinical~~sales ~~trials~~and ~~are~~adversely ~~intended~~affect toour ~~serve~~revenue. asCompliance ~~the~~with ~~basis~~applicable ~~for~~regulatory ~~marketing~~requirements ~~approval~~regarding in the ~~United~~export ~~States,~~of ~~the~~our ~~FDA~~products ~~will~~may ~~generally~~create ~~not~~delays ~~approve~~in the ~~application~~introduction onof ~~the~~our ~~basis~~products ofin ~~foreign~~international ~~data~~markets ~~alone~~or, ~~unless~~in ~~(1)~~some ~~the~~cases, ~~data~~prevent ~~are~~the ~~applicable~~export toof ~~the~~our ~~United~~products ~~States~~to ~~population~~some ~~and~~countries ~~United~~altogether. ~~States~~Furthermore, ~~medical~~U.S. ~~practice;~~export ~~(2)~~control ~~the~~laws ~~trials~~and ~~are~~economic ~~performed~~sanctions byprohibit ~~clinical~~the ~~investigators~~shipment of ~~recognized~~certain ~~competence~~products and ~~pursuant~~services to ~~Current~~countries, ~~Good~~governments ~~Clinical Practice requirements;~~ and ~~(3)~~persons ~~the~~targeted ~~FDA~~by isU.S. ~~able to validate the data through an on-site inspection or other appropriate means~~sanctions. ~~The~~If ~~FDA~~we ~~may~~fail ~~accept the use of some foreign data~~ to ~~support~~comply awith ~~marketing~~export ~~approval~~and ifimport ~~the~~regulations ~~clinical~~and ~~trial~~such ~~meets~~economic ~~certain requirements. Additionally~~sanctions, ~~the~~penalties ~~FDA’s~~could ~~clinical~~be ~~trial requirements~~imposed, including ~~the~~fines ~~adequacy of the subject population studied~~ and/or ~~statistical~~denial ~~powering,~~of ~~must~~certain beexport ~~met~~privileges. ~~Furthermore~~Moreover, ~~such~~any ~~foreign~~new ~~trials~~export ~~would~~or beimport ~~subject~~restrictions, tonew ~~the~~legislation ~~applicable~~or ~~local~~shifting ~~laws~~approaches ofin the ~~foreign~~enforcement ~~jurisdictions~~or ~~where~~scope ~~the~~of ~~trials~~existing ~~are~~regulations, ~~conducted.~~or ~~There~~in ~~can be no assurance that~~ the ~~FDA~~countries, ~~NMPA~~persons or ~~any~~products ~~applicable~~targeted ~~foreign~~by ~~regulatory~~such ~~authority~~regulations, ~~will~~could ~~accept~~result ~~data~~in ~~from~~decreased ~~trials~~use ~~conducted outside~~ of ~~its~~our ~~respective~~products ~~jurisdiction. If the FDA~~by, ~~NMPA~~ or ~~any~~in ~~applicable~~our ~~foreign~~decreased ~~regulatory~~ability ~~authority~~to ~~does~~export ~~not~~our ~~accept~~products ~~such data~~to, itexisting ~~would~~or ~~result~~potential incustomers ~~the~~with ~~need~~international ~~for~~operations. ~~additional~~Any ~~trials,~~decreased ~~which~~use ~~would~~of beour ~~costly~~products ~~and~~or ~~time-consuming~~limitation ~~and~~on ~~delay aspects of~~ our ~~business~~ability ~~plan,~~to ~~and~~export ~~which~~or ~~may~~sell ~~result~~access into our ~~product~~products ~~candidates~~would ~~not~~likely ~~receiving~~adversely ~~approval~~affect ~~for~~our ~~commercialization in the applicable jurisdiction~~business.

~~Even~~Risks ifRelated weto ~~obtain~~Ownership ~~marketing approvals for our products, the terms~~ of ~~approvals~~Our ~~and~~Common ~~ongoing~~Stock ~~regulation of our products may limit how we manufacture~~ and ~~market~~Our ~~our~~Status ~~products~~as ~~and~~a ~~compliance~~Public ~~with such requirements may involve substantial resources, which could materially impair our ability to generate revenue.~~Company

~~Even~~The iftrading ~~marketing~~price ~~approval~~ of aour ~~product~~common ~~candidate~~stock ishas ~~granted,~~been ~~an approved product~~ and ~~its~~is ~~manufacturer~~likely ~~and marketer are subject~~ to ~~ongoing~~be ~~review~~volatile and ~~extensive regulation, including the potential requirements~~ to ~~implement~~fluctuate asubstantially, risk evaluation and mitigation strategy or to conduct costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. We must also comply with requirements concerning advertising and promotion for any of our products for which wecould ~~obtain~~result ~~marketing approval. Promotional communications are subject to a variety of legal and regulatory restrictions and must be consistent with the information~~ in ~~the~~substantial ~~product’s~~losses ~~approved labelling. Thus, we will not be able to promote any products we develop~~ for ~~indications~~purchasers ~~or uses for which they are not approved. In addition, manufacturers~~ of approved products and those manufacturers’ facilities are required to comply with extensive FDA requirements including ensuring quality control and manufacturing procedures, which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. We and our ~~contract~~common ~~manufacturers could be subject to periodic unannounced inspections by the FDA to monitor and ensure compliance~~stock.

Our ~~employees,~~stock ~~independent~~price ~~contractors~~has been, ~~principal~~and ~~investigators,~~is ~~consultants~~likely to be, ~~commercial~~volatile. ~~partners~~The stock market in general and ~~vendors~~the ~~may~~market ~~engage~~for companies in ~~misconduct~~our orindustry ~~other~~in ~~improper~~particular ~~activities~~have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. Volatility in our common stock is also subject to risks and uncertainties, including ~~non-compliance~~those ~~with~~discussed ~~regulatory~~in ~~standards~~this “Risk Factors” section. These and ~~requirements~~other market and industry factors may cause the market price and demand for our common stock to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from selling their shares of our common stock and may otherwise negatively affect the liquidity of our common stock. As a result of this volatility, investors may not be able to sell their shares at or above the price paid.

WeSome ~~are~~companies ~~exposed~~that tohave ~~the~~experienced ~~risk~~volatility ofin ~~employee~~the ~~fraud~~trading orprice ~~other~~of ~~misconduct~~their orshares ~~failure~~have tobeen ~~comply~~the ~~with~~subject applicable regulatory requirements. Misconduct by employees and independent contractors, such as principal investigators, consultants, commercial partners and vendors, could include failures to comply with regulations of ~~the~~securities ~~FDA~~class ~~and~~action ~~other~~litigation. ~~comparable~~Any ~~regulatory~~lawsuit ~~authorities,~~ to ~~provide~~which ~~accurate~~we ~~information~~are toa ~~such regulators~~party, ~~to comply~~ with ~~manufacturing standards we have established, to comply with healthcare fraud and abuse laws, to report financial information~~ or ~~data~~without ~~accurately or to disclose unauthorized activities to us. In particular~~merit, ~~sales,~~may ~~marketing~~result ~~and other business arrangements~~ in ~~the~~an ~~healthcare~~unfavorable ~~industry are subject to extensive laws intended to prevent fraud, kickbacks, self-dealing and other abusive practices~~judgment. ~~These~~We ~~laws~~also may ~~restrict~~decide ~~or prohibit a wide range of business activities, including, but not limited~~ to, ~~research,~~settle ~~manufacturing,~~lawsuits ~~distribution,~~on ~~pricing,~~unfavorable ~~discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements~~terms. ~~Employee~~Any ~~and~~such ~~independent~~negative ~~contractor~~outcome ~~misconduct~~ could ~~also~~result ~~involve~~in ~~the~~payments ~~improper use~~ of ~~individually~~substantial ~~identifiable~~damages ~~information,~~or ~~including~~fines, ~~without~~damage ~~limitation, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm~~ to our reputation. Inor ~~addition,~~adverse ~~federal~~changes ~~procurement laws impose substantial penalties for misconduct in connection with government contracts and require certain contractors~~ to ~~maintain~~our ~~a code of~~ business ~~ethics~~practices. ~~and~~Defending ~~conduct.~~against Itlitigation is ~~not~~costly ~~always possible to identify~~ and ~~deter~~time-consuming ~~employee~~ and ~~independent~~could ~~contractor~~divert ~~misconduct,~~our ~~and~~management’s ~~any~~attention ~~precautions we take to detect~~ and ~~prevent~~our improper activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such lawsresources. IfFurthermore, ~~any~~during ~~such actions are instituted against us~~litigation, ~~those~~there ~~actions~~ could ~~have~~be anegative ~~significant~~public ~~impact~~announcements onof ~~our business, including~~ the ~~imposition~~results of ~~civil~~hearings, ~~criminal~~motions ~~and~~or ~~administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and~~ other ~~federal~~interim ~~healthcare~~proceedings ~~programs,~~or ~~contractual damages~~developments, ~~reputational~~which ~~harm,~~could ~~diminished~~have ~~profits and future earnings, additional reporting or oversight obligations if we become subject to~~ a ~~corporate~~negative ~~integrity~~effect ~~agreement~~on ~~or other agreement to resolve allegations of non-compliance with~~ the ~~law~~market ~~and~~price ~~curtailment or restructuring~~ of our ~~operations,~~common ~~any of which could adversely affect our ability to operate~~stock.

41If we are not able to comply with the applicable continued listing requirements or standards of The Nasdaq Stock Market LLC, Nasdaq could delist our common stock, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Our ~~current~~shares ~~and~~of ~~future~~our ~~relationships~~common ~~with~~stock ~~healthcare~~are ~~professionals,~~listed ~~principal~~on ~~investigators~~the Capital Market tier of the Nasdaq Stock Market, ~~consultants~~or Nasdaq, ~~customers~~under ~~and~~the ~~third-party~~symbol ~~payors~~“NXL.” inNasdaq ~~the~~has ~~United~~rules ~~States~~for ~~and~~continued ~~elsewhere~~listing, ~~may~~including, bewithout ~~subject~~limitation, ~~directly~~minimum ormarket ~~indirectly~~capitalization, minimum stockholders’ equity and other requirements. In order to ~~applicable~~maintain ~~anti-kickback~~that listing, ~~fraud~~we must satisfy minimum financial and ~~abuse,~~other ~~false~~continued ~~claims,~~listing ~~physician~~requirements ~~payment~~and ~~transparency~~standards, ~~health~~including ~~information~~the ~~privacy~~Minimum ~~and~~Bid ~~security~~Price Rule (as discussed below) and ~~other~~those ~~healthcare~~regarding ~~laws~~director independence and ~~regulations~~independent committee requirements, ~~which~~minimum ~~could~~stockholders’ ~~expose~~equity, usand certain corporate governance requirements. There can be no assurances that we will be able to ~~penalties~~comply with the applicable listing standards.

Healthcare providers, physicians, clinicians, and third-party payors in the United States and elsewhere will play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. Our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and third-party payors may expose us to broadly applicable fraud and abuse and other healthcare laws, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act, that may constrain the business or financial arrangements and relationships through which we research, sell, market and distribute any products for which we obtain marketing approval. In addition, we may be subject to physician payment transparency laws and patient privacy and security regulation by the federal government and by the states and foreign jurisdictions in which we conduct our business. The applicable federal, state and foreign healthcare laws that may affect our ability to operate include the following:40

●On ~~the~~January 21, ~~federal~~2026, ~~Anti-Kickback~~the ~~Statute,~~Company ~~which~~received ~~prohibits,~~a ~~among~~deficiency ~~other~~letter ~~things,~~(the ~~persons~~“Notice”) from ~~knowingly~~the ~~and~~Listing ~~willfully~~Qualifications ~~soliciting,~~Department ~~offering,~~of ~~receiving~~The orNasdaq ~~providing~~Stock ~~remuneration,~~Market ~~directly~~LLC ornotifying ~~indirectly~~the Company that, inbased ~~cash~~upon orthe inclosing ~~kind,~~bid toprice ~~induce~~of orthe ~~reward~~Company’s common stock, orpar invalue ~~return~~$0.001 ~~for~~per share, ~~either~~for the ~~referral~~last of30 anconsecutive ~~individual~~business ~~for~~days, or the ~~purchase,~~Company ~~lease,~~is ~~order~~not orcurrently ~~recommendation~~in ~~of,~~compliance ~~any~~with ~~good,~~the ~~facility,~~requirement ~~item~~to ormaintain ~~service,~~a ~~for~~minimum ~~which~~bid ~~payment~~price ~~may~~of be$1.00 ~~made,~~per inshare ~~whole~~for orcontinued inlisting ~~part~~on The Nasdaq Capital Market, ~~under~~as ~~federal~~set ~~and~~forth ~~state~~in ~~healthcare~~Nasdaq ~~programs~~Listing ~~such~~Rule 5550(a)(2) as(the ~~Medicare~~“Minimum ~~and~~Bid ~~Medicaid;~~Requirement”).

●The ~~federal~~Notice ~~civil~~has ~~and~~no ~~criminal~~immediate ~~false~~effect ~~claims~~on ~~laws,~~the ~~including~~continued listing status of the ~~federal~~Common ~~False~~Stock ~~Claims~~on ~~Act,~~The ~~which~~Nasdaq ~~impose~~Capital ~~criminal~~Market, and, ~~civil penalties~~therefore, ~~including~~the ~~through~~Company’s ~~civil~~listing ~~whistle~~remains ~~blower~~fully oreffective. ~~qui~~In ~~tam~~accordance ~~actions~~with Nasdaq Listing Rule 5810(c)(3)(A), ~~against~~the ~~individuals~~Company oris ~~entities~~provided ~~for,~~a ~~among~~compliance ~~other~~period ~~things,~~of ~~knowingly~~180 ~~presenting~~calendar days from the date of the Notice, or ~~causing~~until toJuly 20, ~~be presented~~2026, to regain compliance with the ~~federal~~Minimum ~~government~~Bid Requirement. To regain compliance, ~~including~~the closing bid price of the ~~Medicare~~Common ~~and~~Stock ~~Medicaid~~must ~~programs,~~meet ~~claims~~or exceed $1.00 per share for ~~payment~~a ~~that~~minimum ~~are~~of ~~false~~ten orconsecutive ~~fraudulent~~business ordays ~~making~~prior to July 20, 2026. If the Company is not in compliance with the Minimum Bid Requirement by July 20, 2026, the Company may be afforded a ~~false~~second ~~statement~~180 tocalendar ~~avoid~~day compliance period. To qualify for this additional compliance period, ~~decrease~~the orCompany ~~conceal~~will anbe ~~obligation~~required to ~~pay~~meet ~~money~~the tocontinued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the ~~federal~~exception ~~government;~~of the Minimum Bid Price requirement.

●If ~~the~~Nasdaq ~~civil~~delists ~~monetary~~our ~~penalties~~common ~~statute,~~stock ~~which~~from ~~imposes~~trading ~~penalties~~on ~~against~~its ~~any~~exchange ~~person~~and orwe ~~entity~~are ~~who,~~not ~~among~~able ~~other things, is determined~~ to ~~have~~list ~~presented~~our orcommon ~~caused~~stock toon beanother ~~presented~~national asecurities ~~claim~~exchange, towe aexpect ~~federal~~our ~~health~~common ~~program~~stock ~~that~~could ~~the~~be ~~person~~quoted ~~knows~~on ~~or should know is for~~ an ~~item~~over-the-counter ormarket. ~~service~~If ~~that~~this ~~was~~were ~~not~~to ~~provided~~occur, aswe ~~claimed~~could orface issignificant ~~false~~adverse orconsequences, ~~fraudulent;~~including:

● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a ~~scheme~~limited toavailability ~~defraud any healthcare benefit program or obtain, by means~~ of ~~false~~market orquotations fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, ~~healthcare~~our ~~benefits,~~common ~~items or services relating to healthcare matters~~stock;

● ~~HIPAA,~~reduced asliquidity ~~amended by the Health Information Technology~~ for ~~Economic~~our ~~and~~common Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health informationstock;

● ~~the~~a ~~federal~~determination ~~Physician~~that ~~Payments~~our ~~Sunshine~~common ~~Act,~~stock ~~created~~is ~~under~~a ~~Section~~“penny ~~6002 of Patient Protection and Affordable Care Act~~stock, ~~as amended by the Health Care and Education Reconciliation Act, or collectively, the “ACA,~~” ~~and~~which ~~its~~will ~~implementing~~require ~~regulations,~~brokers ~~created~~trading ~~annual~~in ~~reporting~~our ~~requirements~~common ~~for~~stock ~~manufacturers~~to ofadhere ~~products,~~to ~~devices,~~more ~~biologicals~~stringent rules and ~~medical~~possibly ~~supplies~~result ~~for~~in ~~certain~~a ~~payments~~reduced ~~and~~level ~~“transfers~~ of ~~value”~~trading ~~provided~~activity toin ~~physicians~~the ~~and~~secondary ~~teaching~~trading ~~hospitals,~~market asfor ~~well~~our ~~as ownership and investment interests held by physicians and their immediate family members~~securities; ~~and~~

42● a limited amount of news and analyst coverage; and

● ~~analogous~~a ~~state~~decreased ~~and~~ability ~~foreign laws, such as state anti-kickback and false claims laws, which may apply~~ to ~~sales~~obtain oradditional ~~marketing~~financing ~~arrangements~~in and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require companies to comply with voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance effortsfuture.

~~Further,~~If ~~the~~equity ~~ACA,~~research ~~among~~analysts ~~other~~do ~~things,~~not ~~amended~~publish ~~the~~research ~~intent~~or ~~requirement~~reports, ~~of the federal Anti-Kickback Statute and certain criminal statutes governing healthcare fraud. A person~~ or ~~entity~~publish nounfavorable ~~longer~~research ~~needs to have actual knowledge of the statute~~ or ~~specific~~reports ~~intent~~about ~~to violate it. In addition~~us, ~~the~~our ~~ACA~~business ~~provided that the government may assert that a claim including items~~ or ~~services~~our ~~resulting~~market, ~~from~~our astock ~~violation~~price ofand ~~the~~trading ~~federal~~volume ~~Anti-~~could ~~Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act~~decline.

~~Efforts~~The totrading ~~ensure~~market ~~that~~for our ~~future~~common ~~business~~stock ~~arrangements with third parties~~ will ~~comply~~be ~~with~~influenced ~~applicable~~by ~~healthcare~~the ~~laws~~research and ~~regulations~~reports ~~may~~that ~~involve~~equity ~~substantial~~research ~~costs.~~analysts Itpublish isabout ~~possible~~us ~~that~~and ~~governmental authorities will conclude that~~ our business. ~~practices~~We ~~may~~do not ~~comply~~currently ~~with~~have ~~current~~and ormay ~~future~~never ~~statutes,~~obtain ~~regulations~~research orcoverage ~~case~~by ~~law~~equity ~~involving~~research ~~applicable fraud and abuse or other healthcare laws~~analysts. IfEquity ~~our~~research ~~operations~~analysts ~~are~~may ~~found~~elect not to beprovide inresearch ~~violation~~coverage of ~~any~~our ofcommon ~~these~~stock, ~~laws~~and orsuch ~~any~~lack ~~other~~of ~~governmental~~research ~~regulations~~coverage ~~that~~ may ~~apply~~adversely toaffect ~~us,~~the wemarket ~~may~~price beof ~~subject~~our tocommon ~~significant~~stock. ~~civil,~~In ~~criminal~~the ~~and~~event ~~administrative~~we ~~penalties,~~do ~~including,~~have ~~without~~equity ~~limitation,~~research ~~damages,~~analyst ~~monetary fines~~coverage, ~~disgorgement,~~we ~~possible~~will ~~exclusion~~not ~~from~~have ~~participation~~any incontrol ~~Medicare,~~over ~~Medicaid~~the ~~and other federal healthcare programs~~analysts, ~~contractual~~or ~~damages,~~the ~~reputational~~content ~~harm, diminished profits~~ and ~~future~~opinions ~~earnings,~~included ~~additional~~in ~~reporting~~their orreports. ~~oversight~~The ~~obligations~~price ~~if we become subject to a corporate integrity agreement or other agreement to resolve allegations~~ of ~~non-compliance~~our ~~with~~shares ~~the~~could ~~law~~decline ~~and~~if ~~curtailment~~one or ~~restructuring~~more ofequity ~~our~~research ~~operations,~~analysts ~~any~~downgrade ~~of which could adversely affect~~ our ~~ability~~shares toor ~~operate~~issue ~~our~~other ~~business~~unfavorable ~~and~~commentary ~~pursue~~or ~~our~~research ~~strategy~~about us. If ~~any~~one ~~of the physicians~~ or ~~other~~more ~~healthcare~~equity ~~providers~~research oranalysts ~~entities~~ceases ~~with~~coverage ~~whom~~of weus ~~expect~~or fails to dopublish ~~business,~~reports ~~including~~on ~~future~~us ~~collaborators~~regularly, ~~are~~demand ~~found~~for ~~not~~our toshares ~~comply~~could ~~with applicable laws~~decrease, ~~they~~which ~~may~~in beturn ~~subject~~could tocause ~~criminal,~~the ~~civil~~trading price or ~~administrative~~trading ~~sanctions,~~volume ~~including~~of ~~exclusions~~our ~~from~~common ~~participation~~stock into ~~government healthcare programs, which could also affect our business~~decline.

~~Recently~~We ~~enacted~~do ~~and~~not ~~future~~intend ~~legislation may increase the difficulty and cost for us and our collaborators~~ to ~~obtain~~pay ~~marketing~~cash ~~approval~~dividends ofon ~~and commercialize~~ our ~~products~~common ~~and~~stock ~~affect~~in the ~~prices~~foreseeable ~~we may obtain~~future.

InWe ~~the~~have ~~United~~never ~~States~~declared ~~and~~or ~~some~~paid ~~foreign~~any ~~jurisdictions,~~cash ~~there~~dividends ~~have~~on ~~been~~our acommon ~~number~~stock, ofand ~~legislative~~we ~~and~~currently ~~regulatory~~do ~~changes~~not ~~and~~anticipate ~~proposed~~paying ~~changes~~any ~~regarding~~cash dividends in the ~~healthcare~~foreseeable ~~system~~future. ~~that~~We ~~could~~intend ~~prevent,~~to ~~alter~~retain orany ~~delay~~earnings ~~marketing~~to ~~approval~~finance the development and expansion of our ~~existing~~products orand ~~future~~business. ~~products~~Accordingly, ~~restrict~~our orstockholders ~~regulate~~will ~~post-approval~~not ~~activities~~realize ~~and~~a ~~affect~~return ~~our~~on ~~ability~~their toinvestments ~~profitably~~unless ~~sell~~the ~~any~~trading ~~products~~price ~~for~~of ~~which~~our wecommon ~~obtain~~stock ~~marketing approval~~appreciates.

Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. For example, the ACA, which was enacted in the United States in March 2010, includes measures to change health care delivery, decrease the number of individuals without insurance, ensure access to certain basic health care services and contain the rising cost of care. The healthcare reform movement, including the enactment of the ACA, has significantly changed health care financing by both governmental and private insurers in the United States. With respect to pharmaceutical manufacturers, the ACA increased the number of individuals with access to health care coverage, but it simultaneously imposed, among other things, increased liability for rebates and discounts owed to certain entities and government health care programs, and new transparency reporting requirements under the Physician Payments Sunshine Act. For a detailed discussion of the ACA’s provisions of importance to the pharmaceutical industry, as well as a description of reform legislation passed subsequent to the ACA, see the section titled “Business — Government Regulation — Healthcare Reform Efforts.”41

~~Since~~Concentration ~~its enactment, there have been judicial and Congressional challenges to certain aspects~~ of ~~the~~ownership ~~ACA, as well as efforts to repeal or replace certain aspects~~ of ~~the~~our ~~ACA.~~common Westock ~~continue~~among toour ~~evaluate~~existing ~~the~~executive ~~effect~~officers, ~~that~~directors ~~the ACA~~ and ~~its~~principal ~~possible~~stockholders ~~repeal~~may ~~and~~prevent ~~replacement~~new ~~has~~investors onfrom ~~our~~influencing ~~business.~~significant Itcorporate isdecisions ~~uncertain~~and ~~the~~matters ~~extent~~submitted to ~~which~~stockholders ~~any~~for ~~such changes may impact our business or financial condition~~approval.

43Our executive officers, directors and current beneficial owners of 5% or more of our common stock and their respective affiliates, in the aggregate, beneficially own approximately 22.14% of our outstanding common stock, based on the number of shares of our common stock outstanding as of March 23, 2026. As a result, these persons, acting together, would be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors, any merger, consolidation or sale of all or substantially all of our assets or other significant corporate transactions. In addition, these persons, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our common stock by:

In● ~~addition to the ACA~~delaying, ~~other~~deferring federal health reform measures have been proposed and adopted in the United States. For example, legislation has been enacted to reduce the level of reimbursement paid to providers under the Medicare program over time, as well as phase in alternative payment models for provider services under the Medicare program with the goal of incentivizing the attainment of pre-defined quality measures. As these measures are not fully in effect, and since the U.S. Congress could intervene to prevent their full implementation, at this time, it is unclear how payment reductions or ~~the~~preventing ~~introduction~~a ofchange ~~the quality payment program will impact overall physician reimbursement under the Medicare program. It is also unclear if changes~~ in Medicare payments to providers would impact such providers’ willingness to prescribe and administer our existing or future products, if approved. Further, there has been heightened governmental scrutiny over the manner in which companies set prices for their marketed products. For example, there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, review the relationship between pricing and patient programs, and reform government program reimbursement methodologies for products.control;

We● ~~expect~~entrenching ~~that~~our ~~the~~management ~~ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria~~ and/or ~~in additional downward pressure on~~ the ~~price~~board that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of ~~cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.~~directors;

~~Legislative~~● ~~and~~impeding ~~regulatory~~a ~~proposals have been made to expand post-approval requirements and restrict sales and promotional activities for products. We cannot be sure whether additional legislative changes will be enacted~~merger, ~~or whether the FDA regulations~~consolidation, ~~guidance~~takeover or ~~interpretations~~other ~~will~~business becombination ~~changed,~~involving or what the impact of such changes on the marketing approvals of our products, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us; ~~to more stringent product labelling and post-marketing testing and other requirements.~~or

~~The~~● ~~COVID-19~~discouraging ~~pandemic~~a ~~negatively~~potential ~~impacted our~~acquirer ~~business~~from ~~and~~making our financial performance, and future global pandemics could have subsequent negative impacts, including delays or disruptions with respect to our research and development, manufacturing operations, or clinical trial recruitment and progress. Additionally, the clinical supply of our medical devices could be negatively impacted due to reduced operations or a ~~shutdown~~tender ofoffer ~~our third-party manufacturing facilities, distribution channels and transportation systems,~~ or ~~shortages~~otherwise ofattempting ~~raw materials. Additionally, as seen in connection with the COVID-19 pandemic, public health crises may result in significant governmental measures being implemented~~ to obtain control ~~the spread~~ of a ~~virus, including quarantines, travel restrictions, social distancing and business shutdowns~~us. ~~These measures may negatively affect our business by disrupting our operations, increasing the risk of a cybersecurity incident, or other business disruptions outside of our control.~~

~~Our~~In ~~business~~addition, ~~activities~~some of these persons or entities may behave ~~subject~~interests todifferent ~~the~~than Uyours.S. ~~Foreign~~For ~~Corrupt~~example, ~~Practices~~because ~~Act,~~many orof ~~the~~these ~~FCPA,~~stockholders ~~and~~purchased ~~similar~~their ~~anti-bribery~~shares ~~and~~at ~~anti-corruption~~prices ~~laws~~substantially ofbelow ~~other~~the ~~countries~~price inat which weshares ~~operate,~~were assold ~~well~~in asour ~~U.S.~~public offering and ~~certain~~have ~~foreign~~held ~~export~~their ~~controls,~~shares ~~trade~~for ~~sanctions~~a ~~and~~longer ~~import~~period, ~~laws~~they ~~and~~may ~~regulations.~~be ~~Compliance~~more ~~with~~interested ~~these~~in ~~legal~~selling ~~requirements~~our ~~could~~company ~~limit~~to ~~our~~an ~~ability~~acquirer tothan ~~compete~~other ininvestors, ~~foreign~~or ~~markets~~they ~~and~~may ~~subject~~want us to ~~liability~~pursue ifstrategies wethat ~~violate~~deviate ~~them~~from the interests of other stockholders.

IfProvisions wein ~~further expand~~ our ~~operations~~corporate ~~outside~~charter ofdocuments ~~the United States, we must dedicate additional resources to comply with numerous laws~~ and ~~regulations~~under inDelaware ~~each~~law ~~jurisdiction~~could in which we plan to operate. Our business activities may be subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate. The FCPA generally prohibits companies and their employees and third-party intermediaries from offering, promising, giving or authorizing the provision of anything of value, either directly or indirectly, to a non-U.S. government official in order to influence official action or otherwise obtain or retain business. The FCPA also requires public companies to make ~~and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain~~ an ~~adequate~~acquisition ~~system~~ of ~~internal~~our ~~accounting controls. Our business is heavily regulated and therefore involves significant interaction with public officials~~Company, ~~including~~which ~~officials~~may ~~of non-U.S. governments. Additionally, in many other countries, hospitals owned and operated by the government and doctors and other hospital employees would~~ be ~~considered~~beneficial ~~foreign officials under the FCPA. Recently the SEC and DOJ have increased their FCPA enforcement activities with respect~~ to ~~biotechnology and pharmaceutical companies. There is no certainty that all~~ our ~~employees~~stockholders, ~~agents~~more ordifficult ~~contractors, or those of our affiliates, will comply with all applicable laws~~ and ~~regulations,~~may ~~particularly~~prevent ~~given~~attempts ~~the~~by ~~high level of complexity of these laws. Violations of these laws and regulations could result in fines, criminal sanctions against us,~~ our ~~officers~~stockholders ~~or our employees, disgorgement and other sanctions and remedial measures and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability~~ to ~~offer~~replace ~~our products in one~~ or ~~more~~remove ~~countries and could materially damage~~ our ~~reputation,~~current ~~our brand, our international activities, our ability to attract and retain employees and our business, prospects, operating results and financial condition~~management.

44Provisions in our Amended and Restated Certificate of Incorporation and our Amended and Restated Bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

In● ~~addition,~~establish ~~our~~advance ~~products~~notice ~~and~~requirements technology may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import or export of our products and technology, or our failure to obtain any required import or export authorization for ~~our~~stockholder ~~products,~~proposals ~~when~~that ~~applicable,~~can ~~could~~be ~~harm~~acted ~~our~~on ~~international~~at ~~sales~~stockholder ~~and~~meetings adversely affect our revenue. Compliance with applicable regulatory requirements regarding the export of our products may create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to some countries altogether. Furthermore, U.S. export control laws and ~~economic~~nominations ~~sanctions prohibit the shipment of certain products and services~~ to countries, governments and persons targeted by U.S. sanctions. If we fail to comply with export and import regulations and such economic sanctions, penalties could be imposed, including fines and/or denial of certain export privileges. Moreover, any new export or import restrictions, new legislation or shifting approaches in the enforcement or scope of existing regulations, or in the countries, persons or products targeted by such regulations, could result in decreased use of our ~~products~~board ~~by, or in our decreased ability to export our products to, existing or potential customers with international operations. Any decreased use~~ of ~~our products or limitation on our ability to export or sell access to our products would likely adversely affect our business.~~directors;

45● require that stockholder actions must be affected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;

~~Risks~~● ~~Related~~limit towho ~~Ownership~~may ofcall ~~Our~~stockholder ~~Common~~meetings; ~~Stock~~ and ~~Warrants and Our Status as a Public Company~~

● ~~The~~require ~~trading~~the ~~price~~approval of ~~our~~the ~~common~~holders ~~stock~~of ~~has~~at ~~been~~least ~~and~~66.66% isof ~~likely~~the tovotes bethat ~~volatile~~all ~~and~~our tostockholders ~~fluctuate~~would ~~substantially,~~be ~~which~~entitled ~~could~~to ~~result~~cast into ~~substantial~~amend ~~losses~~or ~~for~~repeal ~~purchasers~~certain provisions of our ~~common~~charter ~~stock~~or bylaws or remove a director.

~~Our~~Moreover, ~~stock~~because ~~price~~we ~~has~~are ~~been~~incorporated in Delaware, ~~and~~we isare ~~likely~~governed toby ~~be,~~the ~~volatile.~~provisions ~~The~~of ~~stock~~Section 203 ~~market~~of inthe ~~general~~Delaware ~~and~~General ~~the~~Corporation ~~market~~Law ~~for~~(“DGCL”), ~~companies~~which prohibits a person who owns in excess of 15% of our ~~industry~~outstanding invoting ~~particular~~stock ~~have~~from ~~experienced~~merging ~~extreme~~or ~~volatility~~combining ~~that~~with ~~has~~us ~~often~~for ~~been~~a ~~unrelated~~period toof ~~the~~three ~~operating~~years ~~performance~~after the date of ~~particular~~the ~~companies.~~transaction Asin awhich ~~result~~the person acquired more than 15% of ~~this~~our ~~volatility~~outstanding voting stock, ~~investors~~unless ~~may~~the ~~not~~merger beor ~~able~~combination tois ~~sell~~approved ~~their~~in ~~shares~~a orprescribed ~~warrants~~manner. atThese provisions could discourage potential acquisition proposals and could delay or ~~above~~prevent a change in control transaction. They could also have the ~~price~~effect ~~paid~~of discouraging others from making tender offers for ~~the~~our ~~units~~common stock, including transactions that may be in your best interests. InThese ~~addition~~provisions tomay ~~the~~also ~~factors~~prevent ~~discussed~~changes in ~~these~~our ~~“Risk~~management ~~Factors”~~or ~~sections,~~limit ~~these~~the ~~factors~~price ~~include:~~that investors are willing to pay for our stock.

~~● the commencement, enrollment or results of our planned and future testing and clinical trials;~~42

●Our Amended and Restated Certificate of Incorporation provides that the ~~loss~~Court of ~~any~~Chancery of the State of Delaware and the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our ~~key~~stockholders, ~~scientific~~including claims under the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or ~~management~~our ~~personnel;~~directors, officers or employees.

●Our ~~regulatory~~Amended orand ~~legal~~Restated ~~developments~~Certificate inof Incorporation provides that the ~~United~~Court ~~States,~~of ~~China~~Chancery ~~and~~of ~~other~~the ~~countries;~~State of Delaware is the exclusive forum for:

● ~~the~~any ~~success~~derivative ofaction ~~competitive~~or ~~products~~proceeding orbrought ~~technologies~~on our behalf;

● ~~adverse~~any ~~actions~~action ~~taken~~asserting bya ~~regulatory~~breach ~~agencies~~of ~~with~~fiduciary ~~respect to our clinical trials or manufacturers~~duty;

● ~~changes~~any action asserting a claim against us or ~~developments~~any inof ~~laws~~our directors, officers, employees or ~~regulations~~agents ~~applicable~~arising tounder the DGCL, our ~~products~~Amended and ~~preclinical~~Restated ~~program~~Certificate of Incorporation or our Amended and Restated Bylaws;

● ~~changes~~any action or proceeding to interpret, apply, enforce or determine the validity of our ~~relationships~~Amended ~~with~~and ~~collaborators,~~Restated ~~manufacturers~~Certificate of Incorporation or ~~suppliers~~our Amended and Restated Bylaws; and

● ~~unanticipated~~any ~~safety~~action ~~concerns;~~asserting a claim against us or any of our directors, officers, employees or agents that is governed by the internal-affairs doctrine.

●Our ~~announcements~~Amended ~~concerning~~and ~~our~~Restated ~~competitors~~Certificate orof ~~our~~Incorporation ~~industry~~further inprovides ~~general;~~that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act and the Exchange Act.

●These ~~actual~~exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or ~~anticipated~~our ~~fluctuations~~directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find either exclusive-forum provision in our ~~operating~~Amended ~~results;~~and Restated Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions. We note that there is uncertainty as to whether a court would enforce such exclusive-forum provision and that provision may result in increased costs for investors to bring a claim.

●We ~~changes~~are inan ~~financial~~“emerging ~~estimates~~growth orcompany” ~~recommendations~~and byas ~~securities~~a ~~analysts;~~result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

●We ~~potential~~are ~~acquisitions;~~an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, we do not intend to take advantage of some of the exemptions from reporting requirements that are applicable to other public companies that are not emerging growth companies, including:

● not being required to comply with the ~~results~~auditor attestation requirements of ~~our~~Section ~~efforts~~404 toof ~~discover,~~the ~~develop~~Sarbanes-Oxley Act of 2002, ~~acquire~~as amended, or inthe Sarbanes-~~license~~Oxley ~~additional products~~Act;

● not being required to comply with any requirements that may be adopted by the ~~trading~~Public ~~volume~~Company ofAccounting ~~our~~Oversight ~~securities~~Board onregarding ~~Nasdaq~~mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements;

● ~~sales~~reduced ofdisclosure ~~our~~obligations ~~common~~regarding ~~stock by us, our~~ executive ~~officers~~compensation ~~and~~in ~~directors or~~ our ~~stockholders~~periodic orreports, ~~the~~proxy ~~anticipation~~statements ~~that~~and ~~such~~registration ~~sales may occur in the future~~statements; and

● ~~general~~exemptions ~~economic,~~from ~~political~~the ~~and~~requirements ~~market~~of ~~conditions~~holding ~~and~~a ~~overall~~nonbinding ~~fluctuations~~advisory invote ~~the~~on ~~financial~~executive ~~markets~~compensation inand ~~the~~stockholder ~~United~~approval ~~States,~~of ~~China~~any ~~and~~golden ~~other~~parachute ~~countries;~~payments not previously approved.

~~● stock market price and volume fluctuations of comparable companies and, in particular, those that operate in our industry;~~43

●We cannot predict if investors’ ~~general~~will ~~perception~~find ofour uscommon stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and the trading prices for our securities may be more volatile. We may take advantage of these exemptions until the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering. However, if any of the following events occur prior to the end of such five-year period, (i) our annual gross revenue exceeds $1.235 billion, (ii) we issue more than $1.0 billion of non-convertible debt in any three-year period or (iii) we become a “large accelerated filer,” (as defined in Rule 12b-2 under the Exchange Act), we will cease to be an emerging growth company prior to the end of such five-year period. We will be deemed to be a “large accelerated filer” at such time that we (a) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business; day of our most recently completed fiscal year, (b) have been required to file annual and quarterly reports under the Exchange Act, for a period of at least twelve months and (c) have filed at least one annual report pursuant to the Exchange Act.

●Even ~~unexpected~~after ~~changes~~we inno ~~tariffs,~~longer ~~including~~qualify ~~tariffs~~as ~~that~~an ~~have~~emerging ~~been~~growth orcompany, we may instill ~~the~~qualify ~~future~~as bea ~~imposed~~“smaller byreporting ~~the U.S. or other countries~~company,” ~~trade~~which ~~barriers~~would ~~and~~allow ~~regulatory~~us ~~requirements,~~to ~~including~~take ~~the~~advantage ~~loss~~ of ~~normal~~many ~~trade~~of ~~status between China and~~ the ~~U.S.~~same orexemptions ~~actions~~from ~~taken~~disclosure byrequirements ~~U.S.~~including orreduced ~~China~~disclosure ~~governmental~~obligations ~~authorities~~regarding onexecutive ~~companies~~compensation ~~with significant operations~~ in ~~the~~this ~~U.S.~~Report and ~~China,~~our ~~such~~other asperiodic ~~us,~~reports and ~~protectionist~~proxy ~~or retaliatory measures taken by the U~~statements.~~S. or China.~~

~~These~~Under ~~and~~the ~~other~~JOBS ~~market~~Act, ~~and~~emerging ~~industry~~growth ~~factors~~companies ~~may~~can ~~cause~~also ~~the~~delay ~~market~~adopting ~~price~~new ~~and~~or ~~demand~~revised ~~for~~accounting ~~our~~standards ~~common~~until ~~stock~~such ~~and~~time ~~warrants~~as those standards apply to ~~fluctuate~~private ~~substantially,~~companies. ~~regardless~~We have irrevocably elected to avail ourselves of ~~our~~this ~~actual~~exemption ~~operating~~from ~~performance~~new or revised accounting standards and, ~~which~~therefore, ~~may~~will ~~limit~~be subject to the same new or ~~prevent~~revised ~~investors~~accounting ~~from~~standards ~~selling~~as ~~their~~other ~~shares~~public companies that are emerging growth companies. As a result, changes in rules of ~~our~~U.S. ~~common~~generally ~~stock~~accepted ~~and~~accounting ~~may~~principles ~~otherwise~~or ~~negatively~~their ~~affect~~interpretation, the ~~liquidity~~adoption of new guidance or the application of existing guidance to changes in our ~~common~~business ~~stock~~could significantly affect our financial position and results of operations..

46We have identified material weaknesses in our internal controls over financial reporting, which could impair our ability to produce accurate financial statements on a timely basis.

~~Some~~We ~~companies~~are ~~that~~subject ~~have~~to ~~experienced volatility in~~ the ~~trading~~reporting ~~price~~requirements of ~~their shares have been~~ the ~~subject~~Exchange ~~of securities class action litigation. Any lawsuit to which we are a party~~Act, ~~with~~as ~~or without merit~~amended, ~~may~~the ~~result~~Sarbanes-Oxley inAct ~~an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms. Any such negative outcome could result in payments~~ of ~~substantial~~2002 ~~damages or fines, damage to our reputation or adverse changes to our business practices. Defending against litigation is costly and time~~(“Sarbanes-~~consuming~~Oxley”) and ~~could~~the ~~divert~~rules ~~our management’s attention~~ and ~~our~~regulations ~~resources. Furthermore, during litigation, there could be negative public announcements~~ of ~~the~~Nasdaq. ~~results~~Sarbanes-Oxley ~~of hearings~~requires, ~~motions~~among or other ~~interim proceedings or developments~~things, ~~which~~that ~~could~~we ~~have~~maintain aeffective ~~negative~~disclosure ~~effect~~controls onand ~~the~~procedures ~~market~~and ~~price~~internal ofcontrol ~~our~~over ~~common~~financial ~~stock~~reporting (“ICFR”).

IfAs required by Section 404 of Sarbanes-Oxley t, we ~~are~~must ~~not~~evaluate ~~able~~and test our ICFR in order for management to ~~comply~~report ~~with~~on the ~~applicable~~effectiveness ~~continued~~in ~~listing~~our ~~requirements~~Annual orReport ~~standards~~on ofForm ~~The~~10-K ~~Nasdaq~~filing ~~Stock~~for ~~Market,~~each ~~Nasdaq~~fiscal ~~could~~year. ~~delist~~This requires us to incur substantial additional professional fees and internal costs, expand our ~~common~~accounting ~~stock~~and finance functions, and devote significant management time and attention.

~~Our~~As ~~shares~~ of ~~our common stock are listed on~~ the ~~Capital~~fiscal ~~Market~~year ~~tier~~ended ofDecember 31, ~~the Nasdaq Stock Market~~2025, orour ~~Nasdaq~~management, ~~under~~with the ~~symbol~~participation ~~“NXL.”~~of ~~Nasdaq~~our ~~has~~chief ~~rules~~executive ~~for~~officer ~~continued listing, including, without limitation, minimum market capitalization, minimum stockholders’ equity~~ and ~~other~~chief ~~requirements.~~financial ~~In order to maintain that listing~~officer, weevaluated ~~must~~the ~~satisfy~~effectiveness ~~minimum~~of ~~financial~~our ~~and~~disclosure ~~other~~controls ~~continued listing requirements~~ and ~~standards~~procedures, ~~including~~pursuant ~~the~~to ~~Minimum Bid Price~~ Rule 13a-15(~~as discussed below~~b) ~~and~~under ~~those~~the ~~regarding~~Exchange ~~director~~Act. ~~independence~~Based ~~and~~upon ~~independent~~that ~~committee requirements~~evaluation, ~~minimum~~our ~~stockholders’~~management ~~equity,~~concluded ~~and~~that ~~certain~~our ~~corporate~~disclosure ~~governance~~controls ~~requirements.~~and ~~There~~procedures ~~can~~were benot noeffective ~~assurances~~due ~~that~~to wethe ~~will~~following bematerial ~~able~~weaknesses toin ~~comply~~our ~~with~~internal ~~the~~control ~~applicable~~over ~~listing~~financial ~~standards.~~reporting:

~~Minimum~~● ~~Bid~~Lack ~~Price~~of ~~Requirement~~sufficient resources necessary to provide adequate segregation of duties related to the preparation and review of financial information used in financial reporting and review of controls over the financial reporting process; and

We● ~~are~~Insufficient ~~required~~IT tocontrols ~~maintain~~which aare ~~minimum~~effectively ~~bid~~designed ~~price~~and ~~of $1.00 per share. On May 10~~implemented, ~~2023,~~specifically ~~the~~related ~~Company~~to ~~received~~user/superuser ~~written~~access notice from Nasdaq notifying the Company that it was no longer in compliance with the minimum bid price requirement for continued listing on Nasdaq, as the closing bid price for the Company’s common stock was below $1.00 per share as set forth in the Nasdaq listing rules. After the Company was granted an extended period to ~~regain compliance,~~ the Company ~~received notice from Nasdaq notifying the Company that it has regained compliance with Nasdaq~~’s ~~minimum~~financial ~~bid~~reporting ~~price requirement under Nasdaq Rule 5550(a)(2)~~system.

On September 23, 2024, we received a notice from Nasdaq notifying us that we were not in compliance with the Minimum Bid Price Rule. On October 31, 2024, the Company received notice from Nasdaq notifying the Company that it has regained compliance with Nasdaq’s minimum bid price requirement under Nasdaq Rule 5550(a)(2).44

~~Minimum~~As ~~Stockholder~~described ~~Equity~~in ~~Requirement~~Item 9A-Controls and Procedures—Management’s Annual Report on Internal Control over Financial Reporting, the Company has begun, and will continue the process of remediating its identified material weaknesses. Management’s continuing evaluation and work to enhance the Company’s internal control over financial reporting has required and will continue to require the dedication of additional resources and management time and expense. If the Company fails to maintain the effectiveness of its ICFR, including any failure to implement new or improved controls, or if the Company experiences difficulties in their implementation, the Company’s business and operating results could be harmed, and the Company could fail to meet its financial reporting obligations, which in turn could affect the market price of the Company’s securities. In addition, perceptions of the Company among lenders, investors, securities analysts and others could also be adversely affected. The current material weaknesses or any weaknesses or deficiencies identified in the future could also hurt confidence in the Company’s business and the accuracy and completeness of the Company’s financial statements.

~~Under~~The Company can give no assurances that the ~~Nasdaq~~remediation ~~listing~~measures ~~rules,~~it wehas ~~are~~implemented ~~also~~and ~~required~~will tobegin ~~maintain~~implementing, ~~stockholders’~~or ~~equity~~any offuture atmeasures ~~least~~it $2may take,~~500,000~~ (will remediate the ~~“Minimum~~material ~~Stockholder~~weaknesses ~~Equity~~identified ~~Rule”).~~or Inthat ~~our~~any ~~Form~~additional ~~10-Q~~material ~~for~~weaknesses ~~the~~will ~~period~~not ~~ending~~arise ~~March 31,~~or ~~2024,~~be weidentified ~~reported~~in ~~stockholders’~~the ~~equity~~future ofdue ~~$2,326,987.~~to Onthe ~~May 16,~~Company’s ~~2024,~~failure weto ~~received~~implement aand ~~letter~~maintain ~~from~~effective ~~the~~internal ~~Listing~~control ~~Qualifications~~over ~~Department~~financial ofreporting. ~~Nasdaq~~In ~~notifying~~addition, even if the Company ~~that~~is ~~its~~successful ~~stockholders’~~in ~~equity~~strengthening asits ~~reported~~controls inand ~~such~~procedures, ~~Quarterly~~those ~~Report~~controls ~~did~~and procedures may not ~~satisfy~~be ~~the~~effective ~~continued~~to ~~listing~~prevent ~~requirement~~or ~~under~~identify ~~Nasdaq~~irregularities ~~Listing~~or ~~Rule 5550(b)(1)~~ensure ~~for~~the fair and accurate presentation of the ~~Nasdaq~~Company’s ~~Capital~~financial ~~Market~~statements included in its periodic reports filed with the SEC.

Pursuant to the Notice, the Company had 45 calendar days from the date of the Notice to submit a plan to regain compliance. On July 1, 2024, the Company submitted a plan to Nasdaq. As described in the Company’s submission to Nasdaq, and as set forth in the Current Report on Form 8-K filed by the Company on July 3, 2024, the Company consummated the public offering of 3 million shares of the Company’s Common Stock for total aggregate gross proceeds of approximately $5,250,000. On July 23, 2024, the Company received written notification from the Listing Qualifications Department of Nasdaq, confirming that, based on the information contained in the Company’s Form 8-K, filed with the SEC on July 16, 2024, the Company is now in compliance with the Minimum Stockholder Equity Rule.

Warrants are speculative in nature.

Our warrants do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the warrants may exercise their right to acquire the common stock and pay an exercise price of $4.15 per share prior to three (3) years from the date of issuance, after which date any unexercised warrants will expire and have no further value.

The warrants may not have any value.

The warrants have an exercise term which expires three (3) years from the date of the closing of our initial public offering (September 16, 2022) at an initial exercise price equal to $4.15 per share. There can be no assurance that the market price of our shares of common stock will ever equal or exceed the exercise price of the warrants. In the event that the stock price of our shares of common stock does not exceed the exercise price of the warrants during the period when the warrants are exercisable, the warrants may not have any value.

We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to holders, thereby making such warrants worthless.

We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our shares equal or exceed $12.45 per share (as adjusted for share splits, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. Redemption of the outstanding warrants could force holders (i) to exercise their warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so, (ii) to sell their warrants at the then-current market price when they might otherwise wish to hold their warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of their warrants.

Holders of the warrants have no rights as a common stockholder until they acquire our common stock.

Until holders of the warrants acquire shares of our common stock upon exercise of the warrants, the holders will have no rights with respect to shares of our common stock issuable upon exercise of the warrants. Upon exercise of the warrants, the holder will be entitled to exercise the rights of a common stockholder as to the security exercised only as to matters for which the record date occurs after the exercise.

Our Warrant Agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our Company.

Our Warrant Agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the Warrant Agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

Notwithstanding the foregoing, these provisions of the Warrant Agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our Warrant Agreement.

If any action, the subject matter of which is within the scope of the forum provisions of the Warrant Agreement, is filed in a court other than courts of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.

This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our Company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our Warrant Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board of Directors.

If equity research 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 and warrants will be influenced by the research and reports that equity research analysts publish about us and our business. We do not currently have and may never obtain research coverage by equity research analysts. Equity research analysts may elect not to provide research coverage of our common stock, and such lack of research coverage may adversely affect the market price of our common stock and warrants. In the event we do have equity research analyst coverage, we will not have any control over the analysts, or the content and opinions included in their reports. The price of our shares and warrants could decline if one or more equity research analysts downgrade our shares or issue other unfavorable commentary or research about us. If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our shares could decrease, which in turn could cause the trading price or trading volume of our common stock and warrants to decline.

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

We have never declared or paid any cash dividends on our common stock, and we currently do not anticipate paying any cash dividends in the foreseeable future. We intend to retain any earnings to finance the development and expansion of our products and business. Accordingly, our stockholders will not realize a return on their investments unless the trading price of our common stock appreciates.

Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions and matters submitted to stockholders for approval.

Our executive officers, directors and current beneficial owners of 5% or more of our common stock and their respective affiliates, in the aggregate, beneficially own approximately 29.05% of our outstanding common stock, based on the number of shares of our common stock outstanding as of March 12, 2025. As a result, these persons, acting together, would be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors, any merger, consolidation or sale of all or substantially all of our assets or other significant corporate transactions. In addition, these persons, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our common stock by:

● delaying, deferring or preventing a change in control;

● entrenching our management and/or the board of directors;

● impeding a merger, consolidation, takeover or other business combination involving us; or

● discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

In addition, some of these persons or entities may have interests different than yours. For example, because many of these stockholders purchased their shares at prices substantially below the price at which shares were sold in our public offering and have held their shares for a longer period, 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.

Provisions in our corporate charter documents and under Delaware law could make an acquisition of our Company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws that became effective on December 1, 2021 (as amended August 11, 2022) may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

● establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors;

● require that stockholder actions must be affected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;

● limit who may call stockholder meetings; and

● require the approval of the holders of at least 66.66% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws or remove a director.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired more than 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. These provisions could discourage potential acquisition proposals and could delay or prevent a change in control transaction. They could also have the effect of discouraging others from making tender offers for our common stock, including transactions that may be in your best interests. These provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our stockholders, including claims under the Securities Act and the Exchange Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for:

● any derivative action or proceeding brought on our behalf;

● any action asserting a breach of fiduciary duty;

● any action asserting a claim against us or any of our directors, officers, employees or agents arising under the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws;

● any action or proceeding to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; and

● any action asserting a claim against us or any of our directors, officers, employees or agents that is governed by the internal-affairs doctrine.

Our amended and restated certificate of incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act and the Exchange Act.

These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions. We note that there is uncertainty as to whether a court would enforce such exclusive-forum provision and that provision may result in increased costs for investors to bring a claim. We also note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder, and that Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

We are an “emerging growth company” and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock and warrants may be less attractive to investors.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, we do not intend to take advantage of some of the exemptions from reporting requirements that are applicable to other public companies that are not emerging growth companies, including:

● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act;

● not being required to comply with any requirements that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements;

● reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and

● exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We cannot predict if investors will find our common stock or warrants less attractive because we will rely on these exemptions. If some investors find our common stock or warrants less attractive as a result, there may be a less active trading market for our common stock and warrants and the trading prices for our securities may be more volatile. We may take advantage of these exemptions until the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering. However, if any of the following events occur prior to the end of such five-year period, (i) our annual gross revenue exceeds $1.235 billion, (ii) we issue more than $1.0 billion of non-convertible debt in any three-year period or (iii) we become a “large accelerated filer,” (as defined in Rule 12b-2 under the Exchange Act), we will cease to be an emerging growth company prior to the end of such five-year period. We will be deemed to be a “large accelerated filer” at such time that we (a) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of our most recently completed fiscal year, (b) have been required to file annual and quarterly reports under the Exchange Act, for a period of at least twelve months and (c) have filed at least one annual report pursuant to the Exchange Act.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements including reduced disclosure obligations regarding executive compensation in this Form 10-K and our other periodic reports and proxy statements.

We have identified certain material weaknesses in our internal controls, which could impair our ability to produce accurate consolidated financial statements on a timely basis.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act and the rules and regulations of The Nasdaq Capital Market, or Nasdaq. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. As required by Section 404 of the Sarbanes-Oxley Act, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting in our Form 10-K filing for each fiscal year. This requires us to incur substantial additional professional fees and internal costs to expand our accounting and finance functions and we expend significant management efforts.

As of the fiscal year ended December 31, 2024, our management evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our management concluded that our disclosure controls and procedures were not effective due to the following material weaknesses:

● Lack of sufficient resources necessary to provide adequate segregation of duties related to the preparation and review of financial information used in financial reporting and review of controls over the financial reporting process; and

● Insufficient IT controls which are effectively designed and implemented, specifically related to user/superuser access to the Company’s financial reporting system.

Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were to happen, the market price of our common stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

We maintain an information security program and governance framework that is designed to protect our information systems against operational risks related to cybersecurity.

Our Board of Directors is primarily responsible for overseeing and governing our cybersecurity risk management program. The Audit Committee of our Board of Directors is responsible for overseeing management’s processes for identifying and mitigating risks that affect our operations, including cybersecurity risks. Procedures for assessing, identifying and managing cybersecurity-related risks are incorporated into our overall risk management framework. Senior leadership regularly briefs the full Board of Directors on our cybersecurity and information security posture and the Audit Committee is apprised of cybersecurity incidents deemed to pose a critical risk to our information technology (“IT”) assets or business. We rely upon in-house and third- party cybersecurity vendors to monitor our IT systems and assets and have a governance structure and processes to assess, identify, manage, and report cybersecurity risks.

We continue to assess the risks and changes in the cyber environment, invest in enhancements to our cybersecurity capabilities, and engage in industry and government forums to promote advancements in our cybersecurity capabilities, as well as the broader cybersecurity ecosystem.

Although we have not, as of the date of this Report, experienced a cybersecurity incident that materially affected our business, financial condition and results of operations, we can provide no assurance that we will not experience a material cybersecurity incident in the future.

5245

ITEM 2. PROPERTIES

Our principal executive office is located at 1776 Yorktown, Suite 550, Houston, Texas 77056. Under ASC 842 “Leases”, we have ~~two~~a ~~separate~~ sub-~~leases~~lease (through IIcom Strategic Inc. controlled and owned by our Chief Executive Officer) totaling approximately 4,000 square feet of office space under an operating ~~leases~~lease. Management and supporting staff are ~~hosted~~located at this location. ~~Our lease costs for each of the fiscal years 2023 and 2024 were $54,000.~~ The initial sub-~~leases~~lease expired in January of ~~2025~~2024. The Company ~~has~~ entered into a new ~~one~~sublease ~~year~~for ~~sublease~~the same parties for 4additional space,~~000~~ ~~square~~which ~~feet~~expired ofin ~~office~~February 2026, ~~space~~at aswhich atime ~~short-term~~the ~~lease~~Company is paying month to month. Pursuant to the sublease, ~~the~~we ~~Company~~paid ~~pays and will pay~~ the third -party landlord (not the sub landlord) all direct and indirect rent costs under the primary lease directly for the leased premises. No additional payments are made to the Chief Executive Officer or the entity controlled by him.

We do not own or operate manufacturing facilities for the production of any of our products, nor do we have plans to develop our own manufacturing operations in the foreseeable future. We believe our current premises are sufficient for our needs at this time and for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

~~There~~From time to time, we may become involved in legal proceedings arising in the ordinary course of business. As of the date of this Report, there are no material pending legal proceedings in which the Company or any of its subsidiaries is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of its voting securities, or security holder is a party adverse to us or has a material interest adverse to the Company other than the following:

Sarah Veltz v. Nexalin Technology, Inc. et al.

Plaintiff, Sarah Veltz, filed a lawsuit in this matter on January 20, 2021 in Orange County Superior Court (Case No. 30-2021-01180164-CU-WT-CJC) (the “Complaint”) naming the Company and others as defendants. In her Complaint, Plaintiff contends that she was employed by defendants, including Nexalin, and has not been paid all wages, including overtime wages and other benefits allegedly due her. Plaintiff also contends that, during her employment, she was subjected to sexual harassment by the Company’s then Chief Executive Officer. Plaintiff seeks both compensatory and punitive damages. On March 12, 2021, the Company filed its answer to the Complaint. A Mediation was held on March 5, 2025. A settlement has not yet been reached. The court has set a trial in this matter for June 9, 2025. Management’s intent is to contest the allegations vigorously and, as of the date of this Report, is unable to provide an evaluation of the potential outcome of the litigation within the probable or remote range or to provide an estimate of the amount of or a range of potential loss that might be incurred by the Company.

Employment Development Department

The Company isentered ~~currently~~into ~~engaged~~a in settlement ~~discussions~~discussion with the Employment Development Department (EDD) of the State of California. This matter ~~involves~~involved issues related to our previous management’s classification of certain work provided to or on behalf of the Company’s business as contract labor instead of employee labor. The total amount involved was approximately $300,000. Management ~~has~~ petitioned for reassessment and ~~believes~~believed the ~~hired~~ workers at issue were indeed actual contractors and not employees. We have no business in California other than one part time and one full time worker residing in California. The EDD approved a significant downward adjustment in our outstanding employment tax liability to approximately $40,000 ~~as reflected on its Statement of Account dated November 30, 2023. We are in negotiations with the EDD~~ and ~~have~~later ~~presented~~to aapproximately ~~settlement offer. The Company has accrued~~ $4030,000. ~~and~~All ~~$40,000~~amounts onwere ~~the~~paid ~~consolidated~~prior ~~balance~~to ~~sheets as of~~ December 31, ~~2023~~2025 and ~~2024,~~this ~~respectively.~~matter ~~The~~is ~~reduction in the amount accrued was recognized as other income on the consolidated statement of operations and comprehensive loss during the year ended December 31, 2023~~settled. ~~The Company believes it has adequately accrued for this matter.~~

~~Demand~~ITEM ~~Letter~~4. ~~from~~MINE ~~The~~SAFETY ~~University of Arizona~~DISCLOSURES

OnNot ~~December 8, 2022, the Company received a demand letter from the University of Arizona seeking payment of $111,094~~Applicable. The Company and the University of Arizona agreed on the terms of a settlement for the amounts claimed by the University, whereby the Company was to pay an aggregate of approximately $69,000 (in three equal monthly payments) in full satisfaction of amounts the University claims it is owed. The settlement amount was paid in full as of December 31, 2023.

~~ITEM 4. MINE SAFETY~~46

~~Not~~PART ~~Applicable.~~II

PART II

Principal Market

Our common stock is currently traded on The Nasdaq Capital Market under the symbol “NXL.” ~~Our common stock warrants are listed for trading on The Nasdaq Capital Market under the symbol “NXLIW”~~

Equity Holders

As of March 12 23, ~~2025~~2026, the number of stockholders of our common stock of record was approximately ~~827~~794 persons and the last reported closing price per share of our common stock on such date was $20.~~25.~~41 The number of stockholders of record is not representative of the number of beneficial stockholders due to the fact that many shares are held by depositories, brokers, or nominees.

Dividends

We have not declared or paid any cash dividends on its common stock since inception. We do not intend to pay any cash dividends at this time or in the foreseeable future.

Recent Sales of Unregistered Securities

~~None~~During the fiscal year ended December 31, 2025, the Company granted stock options to purchase an aggregate of 1,075,539 shares of its common stock and issued an aggregate of 1,101,416 shares of restricted common stock under the Company’s 2023 Equity Incentive Plan. The stock options are exercisable in accordance with their respective award agreements. The securities were to employees, officers, directors and consultants in consideration for services rendered to the Company.

Repurchase of Equity Securities

None.

Securities Authorized for Issuance under Equity Compensation Plans

Nexalin’s 2023 Equity Incentive Plan (the “2023 Plan”) was approved by our stockholders on November 10, 2023, and anamendments ~~amendment~~ to the 2023 Plan ~~was~~were approved by our stockholders on August 26, 2024 and July 15, 2025, to provide for additional shares to be available for the grant of awards. The 2023 Plan provides that the maximum number of shares of common stock available for the grant of awards under the 2023 Plan shall be 69,000,000, subject to adjustment for stock dividends, stock splits or similar events. The 2023 Plan is administered by the Compensation Committee of the Board of Directors, which may in turn delegate administrative authority to one or more of our executive officers. Under the terms of the 2023 Plan, the Compensation Committee may grant equity awards, including nonqualified stock options and restricted stock to employees, officers, directors, consultants, agents, advisors and independent contractors.

The 2023 Plan is administered by the Compensation Committee of the Board ~~has~~of ~~granted~~Directors, ~~certain~~which ~~awards~~may in ~~accordance~~turn ~~with~~delegate administrative authority to one or more of our executive officers. Under the terms of the 2023 Plan, tothe ~~Mr. White~~Compensation Committee may grant equity awards, ~~Dr.~~including ~~Owens~~nonqualified stock options and ~~Mr. Michael~~restricted ~~Nketiah~~stock ~~(“Awards”)~~to employees, officers, directors, consultants, agents, advisors and independent contractors.

Mr. White was awarded a sign on/retention bonus of 447,427 vested stock options and 939,597 performance based stock options exercisable at $.894 per share. The performance based options may be awarded over three years based on annual performance based criteria and subject to vesting and continued employment. The 2023 performance criteria was met and 313,199 options were awarded. The 2024 performance criteria was met and 313,199 options were awarded as of July 1, 2024.47

~~Dr. Owens was awarded a sign on/retention bonus of 139,821 vested stock options and 654,362 performance based stock options exercisable at $.894 per share.~~ The ~~performance~~following ~~based~~table ~~options~~sets ~~may~~forth besecurities ~~awarded~~authorized ~~over~~for ~~three~~issuance ~~years~~under ~~based~~any onequity ~~annual~~compensation ~~performance~~plans ~~based~~approved ~~criteria~~by ~~and~~our ~~subject~~stockholders toas ~~vesting~~well ~~and~~as ~~continued~~any ~~employment.~~equity ~~The~~compensation ~~2023~~plans ~~performance~~not ~~criteria~~approved ~~was~~by ~~met~~our ~~and~~stockholders ~~218,121 options were awarded. The 2024 performance criteria was met and 218,121 options were awarded~~ as of ~~July~~December 131, ~~2024~~2025. ~~Dr Owens was awarded an additional 125,000 vested stock options exercisable at $2.95.~~

Plan category

Number of

securities to be

issued upon

exercise of

outstanding

options,

warrants and

rights (a)

Weighted

average exercise

price of

outstanding

options,

warrants and

rights

Number of

securities

remaining

available for

future issuance

under equity

compensation
plans (excluding

securities

reflected in column (a))

Plans approved by our shareholders

4,113,617

1.12

761,405

Plans not approved by shareholders

~~Under~~On December 19, 2025, the ~~terms~~Board and the Compensation Committee approved the grant of ~~her~~stock ~~employment~~options ~~agreement,~~to ~~Ms.~~certain ~~Shelton~~employees isand ~~entitled~~Board members, subject to ~~nonqualified~~shareholder ~~stock~~approval ~~option~~of ~~grants~~an amendment to ~~purchase~~the ~~90,620~~2023 ~~shares~~Plan ofto increase the ~~Company’s~~number ~~common~~of ~~stock~~shares ~~with~~available anfor ~~exercise~~issuance. ~~price~~As of ~~$.6621~~December 31, ~~per~~2025, ~~share~~shareholder approval had not been obtained, ~~subject~~and totherefore ~~certain~~no ~~time~~grant date had occurred, and ~~performance-based~~no ~~vesting~~compensation ~~conditions~~expense has been recognized. The ~~performance~~table ~~criteria~~above ~~has~~does ~~been~~not ~~met~~include 2,400,000 shares underlying stock options that are contingent on the above shareholder approval.

Mr. Nketiah was awarded 100,671 performance based stock option exercisable at $.894 per share. The performance based options may be awarded over three years based on annual performance based criteria and subject to vesting and continued employment. The 2023 performance criteria was met and 33,557 options were approved by the Board. Upon his resignation from the Company as of August 16, 2024, Mr. Nketiah forfeited any further grants of options.

During the year ended December 31, 2024, various consultants, Board members and employees were awarded shares of common stock and/or stock options for 2024 services with a value of $3,160,512.

See Item 11. “Executive Compensation” for a discussion of certain stock related compensation agreements with certain of our executive officers.

ITEM 6. [RESERVED]

5548

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

Special Note Regarding Forward-Looking Statements

You should read the following discussion and analysis of financial condition and operating results together with our financial statements and the related notes and other financial information included elsewhere in this Report. References in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “us,” “we,” “our,” and similar terms refer to Nexalin Technology, Inc. and its subsidiaries. This discussion contains forward-looking statements as that term is defined within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. The events described in forward-looking statements contained in this discussion may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions that may be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Reference is made to “Risk Factors” in this Report. Our actual results may differ materially from those anticipated in these forward-looking statements. For convenience of presentation some of the numbers have been rounded in the text below.

Overview

WeNexalin ~~design~~Technology, ~~and~~Inc. ~~develop~~is ~~innovative~~a ~~neurostimulation~~medical ~~products~~device company tofocused ~~uniquely~~on ~~and~~developing ~~effectively~~innovative ~~help~~neurostimulation ~~combat~~products ~~the~~to ~~ongoing~~address the global mental health epidemic. WeThe ~~developed~~Company generates anlimited ~~easy-to-administer~~domestic ~~medical~~revenue primarily from legacy Gen-1 device —licensing ~~referred~~fees toand electrode sales, as ~~“Generation~~U.S. 1”marketing orof “new Gen-1” —devices ~~that~~has ~~utilizes~~been ~~bioelectronic~~paused ~~medical~~following ~~technology~~the FDA’s December 2019 reclassification of cranial electrotherapy stimulation devices and international sales of our Gen-2. Revenue continues to ~~treat~~be ~~anxiety~~derived from sales of Gen-1 devices and supplies internationally. During fiscal year 2025, ~~insomnia~~the Company advanced its next-generation product development, with the FDA formally accepting the Company’s Q-Submission for its Gen-2 SYNC system targeting Alzheimer’s disease and ~~depression~~dementia, ~~without~~and clinical trials for the ~~need~~Gen-3 HALO device for ~~drugs~~insomnia orin ~~psychotherapy~~the United States. ~~Our~~Management’s ~~original~~priorities include obtaining FDA clearance for its Gen-12 and Gen-3 devices ~~are~~and ~~cranial~~executing ~~electrotherapy~~U.S. ~~stimulation~~clinical ~~(CES)~~trials. ~~devices~~The ~~that~~Company ~~emit~~faces significant challenges, including substantial doubt about its ability to continue as a ~~waveform~~going atconcern 4due ~~milliamps~~to ~~during~~recurring ~~treatment~~losses and ~~are~~negative ~~presently~~cash ~~classified~~flows, bya requirement to regain compliance with Nasdaq’s minimum bid price requirement, and material weaknesses in internal control over financial reporting related to segregation of duties and IT access controls. As of December 31, 2025, the UCompany had cash and cash equivalents and investments of approximately $3.S7 million and an accumulated deficit of approximately $92.9 ~~Food~~million. The Company intends to fund operations through its at-the-market offering facility and ~~Drug~~other ~~Administration~~financing (activities, though there can be no assurance that sufficient capital will be available on acceptable terms, or at all. The neurostimulation industry remains competitive and subject to rapid technological change, and the ~~“FDA”)~~Company’s assuccess adepends ~~Class~~on IIits ~~device~~ability to obtain regulatory approvals, protect its intellectual property, and achieve market acceptance for its products.

The waveform that comprises the basis of our “Generation 2” or “Gen-2” and new “Generation 3” or “Gen-3” headset devices is in Q-submission process for review by the FDA. This process allows Nexalin to get clear, specific, written feedback from the FDA on indications, device classification and clarity on the regulatory pathway and improves the efficiency and predictability of the regulatory pathway. Determinations of the safety and efficacy of our devices in the United States are solely within the authority of the FDA. We plan to conduct decentralized clinical trials for the Gen-3 device in the U.S. and we continue to consult with the FDA as part of the pre-submission process. If and when we obtain FDA clearance for the Gen-3 device, we intend to extend the development and commercialization of our devices for sale in the U.S. and other territories, given the potential unmet demand for the treatment of mental health conditions with our device.

We have designed and developed a new advanced waveform technology to be emitted at 15 milliamps through new and improved medical devices referred to as Gen-2 and Gen-3. Gen-2 is a clinical use device with a modern enclosure to emit the new 15 milliamp advanced waveform. Gen-3 is a new patient headset that will be prescribed by licensed medical professionals in a virtual clinic setting similar to existing tele-health platforms. The Nexalin research team believes that the new 15 milliamp Gen-2 and Gen-3 devices can penetrate deeper into the brain and stimulate associated structures that contribute to or cause mental illness, which we believe will generate enhanced patient response without any risk or unpleasant side effects. The Nexalin regulatory team has made a strategic decision to develop strategies for pilot trials and/or pivotal trials in various mental health disease states. In addition, a new PMA application in the United States is in strategic development for the treatment of depression utilizing both Gen-2 and Gen-3. We plan to develop a strategic schedule to execute additional pilot trials and/or pivotal trials for the new Gen-3 device for anxiety and insomnia in the United States, Brazil and China beginning in the first quarter of 2025. Preliminary data provided by The University of California, San Diego and recent published data from Asia supports the safety of utilizing our 15 milliamp waveform technology. However, the determination of safety and efficacy of medical devices in the United States is subject to clearance by the FDA.

A new pre-submission document in preparation of a new 510(k) and/or De Novo application for our Gen-3 HALO headset at 15 milliamps was filed with the FDA in January of 2023. Formal comments to our pre-submission document filing were received in March of 2023. A formal meeting to address FDA comments took place on May 9, 2023.

Data from these clinical trials will also be used to support an application for the CE-mark of our Gen-2 and new Gen-3 headset devices in the European Union.

All our products are non-invasive, undetectable to the human body and are designed to provide relief to those afflicted with mental health issues without adverse side effects. We have a proprietary design that stabilizes currents, electromagnetic fields, and various frequencies — referred to collectively as a waveform - particularly our proprietary, 15 milliamp patented waveform. Additionally, our devices generate a proprietary high frequency carrier wave for deeper penetration into the brain. It is applied to the brain with an array of electrodes on the forehead and behind each ear at the mastoid. The features of this proprietary waveform and the array of electrodes allow the application of the waveform to the entire brain rather than a small, targeted area of the brain. To ensure deeper penetration into the brain, we have created a waveform that is undetectable to the brain which allows the increase of the power from < 4 mAmps to 15 mAmps, more than a 400% increase without incurring any patient discomfort, risk, or adverse side effects. By increasing the power, our waveform can penetrate deeper into the brain and stimulate deep mid-brain structures associated with mental illness. Our research data and clinical teams believe that a more powerful waveform will create a stronger response in the brain. A stronger response creates a higher level of efficacy. This entire proprietary technique allows Nexalin to provide a non-invasive and comfortable treatment, which we believe is more powerful than any FDA-cleared stimulation device in the market. The waveform that comprises the basis of Gen-2 and new Gen-3 headset devices has been tested in research settings to develop safety data that has been submitted for review by the FDA for safety evaluation and eventual marketing in the United States and around the world. Current pilot study protocols and randomized clinical trials have been designed and submitted to the FDA to provide feedback on final reports and data sets for the purpose of safety and efficacy evaluations in the future. Determinations of the safety and efficacy of our devices are solely within the authority of the FDA.

To address the embarrassment stigma, we are developing a new virtual clinic that will allow the physician to diagnose a mental health issue in the privacy of a tele-psychiatry virtual platform. After diagnosis, the physician will prescribe the Nexalin Gen-3 headset to the patient for treatment. Next, the Gen-3 device will be shipped to the patient’s home. After the patient receives the device, they will pair the headset device with an app in the patient’s smart phone. The app will communicate with the Nexalin cloud servers to authorize the device for treatment according to the protocol designed by the physician. The physician will monitor treatment compliance and other health related issues in a private physician dashboard that connects through the Nexalin app and cloud servers. We believe that to preserve product safety and integrity for home use, the headset device will require physician oversight that will include a prescription for use with a monthly authorization provided by the physician after a monthly virtual visit. All appointments will be in a virtual setting to provide privacy and convenience for the physician and patient. The Nexalin virtual clinic will be provided in a proprietary virtual platform currently in the design stage.

Our China Gen-2 15 milliamp device was approved in China by the China National Medical Products Administration (the “NMPA”) for the treatment of insomnia and depression in China. This device and all other clinical devices will include single use electrodes for long term revenue streams. The USA Gen-2 device bears a fresh and modern appearance that meets the technology standards of the digital tech world of 2024. Early adopters of the Gen-1 device will be able to access additional firmware upgrades which are planned to enhance the previously purchased devices to the new symmetric15-milliamp waveform. Our Gen-2 device will be equipped with Radio Frequency Identification (RFID) technology that exchanges electrode usage data with a reader in the main device. The purpose of RFID is to track and maintain control of the proprietary single use electrode. Our electrode chip will be programmed to exchange data with the device and allow activation for a single treatment with a new electrode only. This ensures a recurring revenue stream on the device and protects against any generic knockoffs designed to avoid treatment costs. This upgrade in technology also ensures the proprietary nature of the electrodes that support treatment outcomes are sustained.

Recent Developments

Formalized Joint Venture; China Related Activities

On May 31, 2023, the Company formalized an agreement related to the formation of a joint venture (the “Joint Venture”) established to engage in the clinical development, marketing, sale and distribution of Nexalin’s second generation transcranial Alternating Current Stimulation (“tACS”) devices (“Gen-2 devices”) in China and other countries in the region. The Joint Venture is registered in Hong Kong.

The Company has no employees or office in China and none of the Company’s operations are conducted in China. The Joint Venture does not maintain any variable interest entity structure or operate any data center in China.

The Joint Venture is controlled by a Board of Directors in which Wider is to have sole representation but neither the Company nor Wider has exclusive decision-making ability over day-to-day or significant operational decisions. Wider and Nexalin own 52% and 48% of the Joint Venture, respectively. In accordance with ASC 323 and ASC 810, the Company recognized $4,851 and $0 of equity method investment income for the twelve months ended December 31, 2024 and 2023, respectively, from the Joint Venture on a one-quarter reporting lag, on the consolidated statements of operations and comprehensive loss.

The investment in the Joint Venture is accounted for using the equity method of accounting. As of December 31, 2024 and 2023 the Company had an Equity Method Investment of $864 and $96,000, respectively, recorded on the consolidated balance sheets. The Company invested $96,000 in the joint venture in September 2023 and Wider invested $104,000. In accordance with ASC 323, the Company uses the equity method of accounting for its investment in the Joint Venture, an unconsolidated entity over which it does not have a controlling interest. The equity method of accounting requires the investment to be initially recorded at cost and subsequently adjusted for the Company’s share of equity in the unconsolidated entity’s earnings or losses. The Company evaluates the carrying amount of this investment in the Joint Venture for impairment in accordance with ASC 323. If the Company determines that a loss in the value of the investment is other than temporary, the Company writes down the investment to its estimated fair value. Any such losses are recorded to equity in income of unconsolidated entities in the Company’s consolidated statements of operations and comprehensive loss. The Company has made an election to classify distributions received from the Joint Venture using the nature of the distribution approach. Distributions received are classified as cash inflows from operating activities based on the nature of the activities of the unconsolidated entity.

Oman

Brazil

Results of Operations

Comparison of the Years ended December 31, ~~2024~~2025 and ~~2023~~2024

Our financial results for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 are summarized as follows:

	Years Ended December 31,						Change			Change(1)
	For the Year Ended December 31,
	2024			2023			$			%
	2025			2024			Change			Change(1)
Revenues, net	$	168,721		$	110,748		$	57,973			52	%
								$			%
Cost of revenues		36,593			25,688			10,905			42	%
Revenues, net	$	301,647		$	168,721		$	132,926			79	%
Gross profit		132,128			85,060			47,068			55	%
Cost of revenues		61,373			36,593			24,780			68	%
Gross profit		240,274			132,128			108,146			82	%
Operating expenses:
Professional fees		~~966~~1,~~815~~270,109			~~574~~966,~~598~~815			~~392~~303,~~217~~294			6831	%
Salaries and benefits		1,~~500~~879,~~089~~283			1,~~387~~500,~~916~~089			~~112~~379,~~173~~194			825	%
Selling, general and administrative		4,~~228~~398,~~986~~241			14,~~897~~228,~~031~~986			2169,~~331,955~~255			~~123~~4	%
Research and development		1,~~190~~083,~~884~~522			1,~~921~~190,~~811~~884			(~~730~~107,~~927~~362	)		(389	)%)
Total operating expenses		78,~~886~~631,~~774~~155			57,~~781~~886,~~356~~774			2744,~~105,418~~381			369	%
Loss from operations		(78,~~754~~390,~~646~~881	)		(57,~~696~~754,~~296~~646	)		(2636,~~058,350~~235	)		368	%
Other income (expense), net:
Other income, net:
Interest income (expense), net		3,193			(38,835	)		42,028			108	%
Interest income, net		8,240			3,193			5,047			158	%
Gain on sale of short-term investments		~~130~~126,~~110~~940			~~231~~130,~~880~~110			(~~101~~3,~~770~~170	)		(442	)%)
Other income		934,~~310~~568			~~239~~9,~~542~~310			~~(230~~25,~~232~~258	)		~~(96~~271	)%
Gain on extinguishment of debt		-			615,000			(615,000	)		(100	)%
Total other income, net		169,748			142,613			27,135			19	%
Total other income (expense), net		142,613			1,047,587			(904,974	)		(86	)%
Loss before provision for income taxes	$	(8,221,133	)	$	(7,612,033	)	$	(609,100	)		8	%
Loss before provision for income taxes	$	(7,612,033	)	$	(4,648,709	)	$	(2,963,324	)		64	%
Provision for income taxes		-			-			-			0	%
Loss before equity in net earnings of affiliate		(7,612,033	)		(4,648,709	)		(2,963,324	)		64	%
Loss before net (loss)/earnings of affiliate		(8,221,133	)		(7,612,033	)		(609,100	)		8	%
Equity in net earnings of affiliate		4,851			-			4,851			100	%
Net (loss)/earnings of affiliate		(1,048	)		4,851			(5,899	)		(122	%)
Net loss	$	(78,~~607~~222,~~182~~181	)	$	(47,~~648~~607,~~709~~182	)	$	(2614,~~958,473~~999	)		648	%
Other comprehensive loss:
Other comprehensive income (loss):
Unrealized loss from short-term investments		(108	)		(36,718	)		36,610			(100	)%
Unrealized gain (loss) from short-term investments		919			(108	)		1,027			(951	%)
Comprehensive loss	$	(78,~~607~~221,~~290~~262	)	$	(47,~~685~~607,~~427~~290	)	$	(2613,~~921,863~~972	)		628	%

(1)

Percentages may not foot due to rounding.

6050

Revenues

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, we generated approximately $~~168~~302,~~721~~000 and $~~110~~169,~~748,~~000 respectively, of revenue primarily from the sale of ~~devices,~~Devices ~~supplies~~ and ~~from~~Licensing ~~licensing~~ and treatment fee agreements with our customers for which we charge a monthly licensing fee for the duration of the agreement. We also generated revenue from treatment fee agreements by collecting fees based on the number of treatments per month ~~the~~to ~~customer performs~~customers. In addition, we derived revenue from ~~equipment~~Equipment by selling boards, electrodes and patient cables to customers for use with our ~~device~~devices. The approximate $133,000 increase in revenue for the year ended December 31, ~~2024~~2025 compared to ~~2023~~the year ended December 31, 2024 was primarily due to an increase in Device sales of ~~supplies~~approximately $81,000 due to increased units sold to international customers in 2025. In addition, Equipment sales increased by approximately $47,000 from increased sales of electrodes and ~~parts~~cables. Other revenue also increased by approximately $26,000 from shipping income and other miscellaneous service income during the year. This was offset by a decrease in Licensing fees of approximately $20,000.

Cost of Revenues and Gross Profit

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, cost of revenues ~~were~~was approximately $3661,~~593~~000 and $2537,~~688~~000, respectively, yielding a gross profit of approximately $~~132~~240,~~128~~000 and $85132,~~060~~000, respectively, or 7880% and 7778% gross profit, respectively. The change in gross profit was not material based on the revenue levels at this time. The slight increase in gross ~~margin~~profit ~~remained~~was ~~consistent~~a ~~year~~result ~~over~~of ~~year~~the mix of revenue types during the periods.

Operating Expenses

Total operating expenses for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 were approximately $78,~~886~~631,~~774~~000 and $57,~~781~~887,~~356~~000, respectively~~. The increase in selling~~, ~~general and administrative expenses was due primarily to~~ an increase ~~in professional fees~~ of approximately $~~392~~744,000, anconsisting ~~increase~~of increases in; salaries and benefits expenses of approximately $~~112~~379,000, anselling, ~~increase~~general inand ~~travel~~administrative ~~expense~~expenses of approximately $~~128~~169,000 and ~~an increase~~ in ~~stock~~professional ~~compensation~~fees expenses of approximately $2303,~~247,~~000. ~~These~~This ~~amounts~~was ~~were~~ offset by a decrease in research and development ~~costs~~expenses of approximately $~~731~~107,000~~, and a decrease in insurance of approximately $75,000~~.

The ~~increase~~salaries inand ~~professional~~benefits ~~fees~~cost isincreases ~~due to an increase in shareholder related expenses~~ of approximately $~~283~~379,000 ~~due~~were toprimarily ~~costs~~attributable ~~associated~~to ~~with~~additional ~~investor~~compensation ~~relations,~~related anto ~~increase~~three innew ~~legal fees of approximately $45~~employees,~~000~~ bonuses and annormal ~~executive search professional fee of $60~~pay,~~000.~~ ~~The~~taxes ~~increase in salaries~~ and ~~benefits~~benefit ~~is due to an~~ increase inthroughout ~~health~~the ~~insurance and an increase in employee bonuses~~organization. ~~The increase in travel expense is primarily due to an increase in investor relation activities.~~

~~The~~Selling, ~~increase~~general inand ~~stock~~administrative ~~compensation~~cost isincreases ~~primarily~~of ~~related~~approximately $169,000 were due to ~~compensating~~increases ~~consultants~~of ~~with~~approximately ~~stock~~$227,000 ~~compensation~~in ~~upon~~consulting ~~shareholder~~expenses ~~approval~~for ofadditional ~~amending~~international ~~the~~distribution ~~Company~~services ~~Equity~~and ~~Plan.~~other ~~The~~advisory ~~decrease~~services, approximately $30,000 of increases in ~~research~~rent for additional space in 2025 and ~~development~~approximately ~~costs~~$40,000 ~~are~~for ~~primarily~~the ~~related~~build toout ~~costs~~of ~~associated~~a ~~with~~new ~~clinical~~website ~~trials~~and ~~not~~marketing ~~incurred~~material, offset by decreases in ~~2024~~insurance of approximately $50,000, in travel expenses of approximately $60,000. The remaining net decrease inof ~~insurance~~approximately is$17,000 was due to avarious ~~reduction~~immaterial changes in ~~our~~various ~~insurance~~accounts ~~premiums~~during the year.

~~Other~~The ~~Income~~increase ~~(Expense)~~in professional fees of approximately $303,000 was primarily due to increases of approximately $45,000 in accounting, $90,000 in legal and $10,000 in printing. These increases are primarily attributable to increased services during the year from the capital raise and other registration statement activity. Additionally, there was an increase of approximately $177,000 for marketing and investor related activity. The remaining net decrease of approximately $19,000 was due to various immaterial changes in various accounts during the year.

~~Other~~Research ~~income~~and ~~(expense),~~development ~~net~~costs asdecreased ofby approximately $107,000 from December 31, 2024 ~~and~~to December 31, 2025. The primary decrease was related to a one-time non-cash compensation charge in 2024 ~~were~~for approximately $~~142~~400,~~613~~000 ~~and~~for $1shares of common stock issued to our Joint Venture party,~~047,587,~~ ~~respectively~~Wider, ~~consisting~~for ofresearch ~~interest~~activities and ~~dividend~~a ~~income~~reduction of approximately $43,000 ~~gain~~of ondecreased costs related to the ~~sale~~SYNC ofdesktop ~~short-term~~project. ~~investments~~This was offset by ~~interest~~increases ~~expense.~~to ~~The~~various ~~decrease~~research inand ~~other~~development ~~income~~projects ~~was~~consisting ~~due~~of the following; increase of approximately $170,000 for development cost related to aour ~~decrease~~virtual inclinic APP, increase cost of approximately $109,000 associated with the ~~gain~~HALO ondevelopment ~~extinguishment~~project, and increase costs of ~~debt~~approximately $51,000 for clinical trials (UCSD and Brazil). The remaining net increase of approximately $6,000 was due to various immaterial changes in ~~2023~~various accounts during the year.

Other Income, net

Other income, net as of December 31, 2025 and 2024 were approximately $170,000 and $143,000 respectively, consisting of interest and dividend income and gain on the sale of short-term investments. The increase in other income was primarily due to an adjustment in a settlement liability that was settled in 2025.

Liquidity and Capital Resources

Working Capital

	December 31, 2024		December 31, 2023
	December 31,2025		December 31,2024
Current assets	$	34,~~961~~299,~~141~~270	$	3,~~429~~961,~~892~~141
Current liabilities		~~546~~887,~~694~~333		~~425~~546,~~281~~694
Working capital	$	3,~~414~~411,~~447~~937	$	3,~~004~~414,~~611~~447

61Current assets increased for the year ended December 31, 2025 primarily as a result of an increase in short-term investments and cash and cash equivalents as a result of a capital raise and use of our ATM program. Accounts receivable also increased as a result of additional revenue near year end.

Current ~~assets~~liabilities increased for the year ended December 31, ~~2024~~2025 ~~primarily~~due asto aan ~~result~~accounts ofpayable an increase infrom ~~short-term~~to ~~investments~~timing ~~as a result~~ of ~~sale of equity~~payments. ~~Cash~~Accrued ~~and~~expense ~~cash equivalents decreased by approximately $6,000. Short-term investments~~ increased bydue ~~approximately~~to ~~$537,000.~~additional ~~Prepaid~~bonuses ~~expenses~~earned and ~~other~~not ~~current~~paid ~~assets~~out ~~decreased~~at byyear ~~approximately $22,000~~end.

~~Current liabilities increased for~~ “At-the-Market” year ended December 31, 2024. Accounts payable decreased approximately $4,000, accrued expenses increased by approximately $129,000 and lease liability – current portion decreased by approximately $4,000.Offering

On October 15, 2025, we entered into an Amendment No. 2 to that certain equity distribution agreement, dated April 29, 2025 (as amended by that certain Amendment No. 1 to the Equity Distribution Agreement, dated May 5, 2025, the “Equity Distribution Agreement”) with Maxim Group LLC (“Maxim”), under which we currently have the ability to issue and sell shares of our common stock, from time to time, through Maxim, up to an aggregate offering price of approximately $4,273,000 (“ATM”). During the year ended December 31, 2025 we sold 691,407 shares of our common stock for approximately $643,000 of gross proceeds. The total commissions and related legal and accounting fees were approximately $119,000 as of December 31, 2025 and we received net proceeds of approximately $524,000.

Subsequent to December 31, 2025, we have sold 1,395,300 shares of our common stock under this program for gross proceeds of approximately $780,000 and net proceeds of approximately $756,000.

As of March 23, 2026, we had remaining capacity to sell up to an additional approximate $2,850,000 worth of common stock under the ATM program.

Cash Flows

The following table summarizes our consolidated cash flows for the years ended December 31, ~~2024~~2025 and ~~2023~~2024:

	December 31, 2024			December 31, 2023
	December 31,2025			December 31,2024
Net cash used in operating activities	$	(34,~~944~~957,~~390~~658	)	$	(3,~~835~~944,~~384~~390	)
Net cash provided by (used in) investing activities	$	(577,539	)	$	4,452,872
Net cash used in investing activities	$	(131,991	)	$	(577,539	)
Net cash provided by (used in) financing activities	$	4,516,184		$	(200,000	)
Net cash provided by financing activities	$	5,169,947		$	4,516,184

Net Cash Used In Operating Activities

Net cash used in operating activities was approximately $34,~~944~~958,~~390~~000 for the year ended December 31, ~~2024~~2025, as compared to $3,~~835~~944,~~384~~000 for the ~~respective~~year ~~period~~ended inDecember 31, ~~2023~~2024, an increase of approximately $1,014,000, which was primarily due to ~~the~~an increase in net loss of approximately $7615,~~607~~000,~~182~~ or approximately $1,121,000 ~~offset~~adjusted byfor annon-cash expenses. The remaining change was due to changes in operating assets and liabilities for the respective periods; a increase in ~~accrued~~accounts payable of approximately $92,000, a decrease in prepaid expenses and ~~accrued~~other ~~expenses~~current -assets ~~related~~of ~~party~~approximately $91,000, increase in inventory of approximately $~~293~~45,000, ~~increases~~an increase in ~~stock~~lease ~~compensation~~liability of approximately $14,~~147,~~000, ~~and~~an ~~accounts~~increase ~~payable~~in ~~and~~accrued ~~accounts~~expenses ~~payable~~of -approximately ~~related~~$123,000 ~~party~~and decrease in accounts receivable of approximately $~~495~~65,000.

Net Cash ~~Provided By (~~Used In) Investing Activities

Net cash ~~provided by (~~used in) investing activities during the year ended December 31, ~~2024~~2025, and ~~2023~~2024 was approximately $~~(577~~132,~~539)~~000 and $4578,~~452~~000,~~872,~~ respectively. For the year ended December 31, ~~which~~2025 this was due to short-term investment sales of approximately $~~33.2~~40,725,000 ~~million~~ offset by purchases of approximately $~~33.7~~40,760,000 ~~million~~ of short-term investments ~~for~~and the purchase of patents and trademarks of approximately $97,000. Net cash used in investing activities during the year ended December 31, 2024, of approximately $578,000 was due to short-term investment sales of approximately $33,224,000 offset by purchases of approximately $33,631,000 of short-term investments and the purchase of patents and trademarks of approximately $170,000.

Net Cash Provided by ~~(Used In)~~ Financing Activities

Net cash provided by ~~(used in)~~ financing activities during the year ended December 31, ~~2024~~2025 and ~~2023~~2024 was approximately $45,~~516~~170,~~184~~000 and $~~(200~~4,516,000), respectively,. ~~which~~The increase in 2025 was primarily due to ~~the~~a ~~issuance~~higher level of common stock ~~for~~sales, ~~approximately~~including ~~$4.5 million from~~ the ~~July 1,~~initial ~~2024~~utilization ~~offering. The December 31, 2023 use~~ of ~~cash~~our ~~was~~at-the-market ~~for~~(“ATM”) aequity ~~payment~~program ofin ~~note~~2025, ~~payable~~which towas annot ~~officer~~utilized ofin ~~the Company~~2024.

Uses and Availability of Additional Funds

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, manufacturing development costs, legal and other regulatory expenses, and general administrative costs. Although we have produced Gen-2, which is selling ininternationally ~~China~~ where it is approved for certain utilizations by medical practitioners, the successful development of our future products is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the clinical development of Gen-3 and obtain regulatory approvals. We are also unable to predict when, if ever, net cash inflows from revenues will enable us to be cash flow positive. This is due to the numerous risks and uncertainties associated with developing products, including, among others, the uncertainty of:

●

successful enrolment in, and completion of clinical trials;

●

performing preclinical studies and clinical trials in compliance with the FDA and/or any comparable regulatory authority requirements;

62● the ability to outsource the manufacture of our products for development, clinical trials and/or potential commercialization;

● the ability to outsource the manufacture of our products for development, clinical trials and/ or potential commercialization;

●

obtaining and maintaining patent, trademark and trade secret protection for our products;

●

scaling the commercial sales of products, if and when approved, whether alone or in collaboration with others;

●

acceptance of existing therapies, and future therapies, if and when approved, by healthcare providers, physicians, clinicians, patients and third-party payors;

●

competing effectively with other therapies;

●

obtaining and maintaining healthcare coverage and adequate reimbursement;

●

protecting our rights in our intellectual property portfolio; and

●

maintaining a continued acceptable safety profile of our products following approval.

Liquidity and Capital Resources

As of December 31, ~~2024~~2025, the Company had a significant accumulated deficit of approximately $8492,~~645~~867,~~231~~000. For the year ended December 31, ~~2024~~2025, the Company had a net loss ~~from~~of ~~operations~~approximately $78,~~754~~222,~~646~~000 and negative cash flows from operations of approximately $34,~~944~~958,~~390~~000. The Company’s ~~operating~~will ~~activities~~continue ~~consume~~to service existing customers in the ~~majority~~United ofStates ~~its~~as ~~cash~~well ~~resources~~as sell devices and equipment overseas. The Company’s ~~will~~operating ~~continue~~activities toconsume ~~service~~the ~~existing~~majority ~~customers~~of inits ~~the~~cash ~~United States~~resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans including clinical trials through ~~2025~~2026 and beyond, as well as other potential strategic and business development initiatives. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company previously funded these losses primarily through the sale of equity and utilization of our ATM program. As of December 31, ~~2024~~2025, the Company had cash and cash equivalents on hand of approximately $~~574~~655,~~485~~000 and short-term investments of approximately $23,~~905~~068,~~438~~000. AsThese offactors, ~~March~~among 12others, ~~2025,~~raise substantial doubt about the ability of the Company ~~had~~to ~~cash~~continue ~~and~~as ~~cash~~a ~~equivalents~~going onconcern ~~hand~~for ofat ~~$592,514~~least ~~and~~twelve ~~short-term~~months ~~investments~~after the date of ~~$1,926,170~~this Report.

Our ability to continue as a going concern will be dependent upon our ability to execute on our business plan, including the ability to generate revenue from ~~the~~overseas ~~joint~~opportunities ~~venture~~ and obtain U.S. approval for the sale of our devices in the United States, and, if necessary, our ability to raise additional capital. Although no assurances can be given as to our ability to deliver on our revenue plans or that unforeseen expenses may arise, management has evaluated the significance of the conditions as of December 31, ~~2024~~2025 and have concluded that we will not have sufficient cash and cash equivalents and short-term investments to satisfy our anticipated cash requirements for the next twelve months from the issuance of these consolidated financial statements. These plans were therefore determined not to be sufficient to overcome the presumption of substantial doubt about the Company’s ability to continue as a going concern within twelve months from the issuance of these consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Effects of Inflation

We do not believe that inflation had a material impact on our business, revenues or operating results during the periods presented.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our consolidated financial statements that require estimation but are not deemed critical, as defined above.

For a detailed discussion of our significant accounting policies and related judgments, see Note 3 of the Notes to Consolidated Financial Statements in “Item 8. Financial Statements and Supplemental Data” of this Report.

6354

Recent Accounting Pronouncements

InSee ~~August~~Note of3 ~~2023,~~– ~~the~~Summary ~~FASB~~of ~~issued~~significant ~~ASU~~accounting ~~2023-05,~~policies ~~Business Combinations—Joint Venture (“JV”) Formations: Recognition~~ and ~~Initial Measurement. The guidance requires newly formed JVs to apply a~~ new ~~basis of~~ accounting tostandards ~~all of its contributed net assets, which results~~ in the JVNotes ~~initially~~to ~~measuring~~the ~~its~~Consolidated ~~contributed~~Financial ~~net~~Statements ~~assets~~in ~~under~~Part ~~ASC 805-20~~II, ~~Business~~Item ~~Combinations.~~8 ~~The~~of ~~new~~this ~~guidance~~Report ~~would be applied prospectively and is effective~~ for ~~all newly formed joint venture entities with~~ a ~~formation~~summary ~~date~~of onrecently oradopted ~~after January 1, 2025, with early adoption permitted. The Company is evaluating the~~ accounting ~~and disclosure requirements of this update and does not expect them to have a material effect on the consolidated financial statements~~pronouncements.

InContractual November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU is effective on a retrospective basis for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this update effective December 31, 2024, on a retrospective basis. Refer to Note 11 for the disclosures related to our single operating segment.Obligations

InSee ~~December~~Note of7 ~~2023,~~– ~~the~~Commitments ~~FASB~~and ~~issued~~Contingencies ~~ASU~~in ~~2023-09,~~the ~~Income~~Notes ~~Taxes~~to ~~(Topic~~the ~~740):~~Consolidated ~~Improvements~~Financial toStatements ~~Income~~in ~~Tax~~Part ~~Disclosures~~II, ~~establishes~~Item ~~incremental~~8 ~~disaggregation~~ of ~~income~~this ~~tax~~Report ~~disclosures pertaining to the effective tax rate reconciliation and income taxes paid. This standard is effective~~ for ~~fiscal~~a ~~years~~summary beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. Early adoption is permitted. The Company is currently evaluating the potential impact of ~~adopting this standard on~~ our ~~disclosures~~contractual obligations.

~~In November 2024, the FASB issued ASU 2024~~Off-~~03,~~Balance ~~Income~~Sheet Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the income statement. The standard is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of adopting this guidance on its consolidated financial statements.Arrangements

~~All~~We ~~other~~have ~~newly~~no ~~issued~~off-balance ~~but~~sheet ~~not~~arrangements ~~yet~~that ~~effective~~have ~~accounting~~or ~~pronouncements~~are reasonably likely to have ~~been~~a ~~deemed~~current toor befuture ~~not~~effect ~~applicable~~on our financial condition, changes in financial condition, revenues or ~~immaterial~~expenses, toresults ~~the~~of ~~Company~~operations, liquidity, capital expenditures or capital resources that is material to investors.

Factors That May Affect Future Results and Financial Condition

The information contained under the caption “Risk Factors” beginning on page 18 of this ~~Form~~Report ~~10-K~~ provides examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Readers should be aware that the occurrence of any of the events described in these risk factors could have a material adverse effect on our business, results of operations and financial condition. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Nasdaq

In September 2025, our IPO warrants expired, and a Form 25 was filed with the SEC to indicate that the warrants had expired and were delisted. The common stock of the Company will continue to trade on the Nasdaq Capital Market under the symbol “NXL”.

Minimum Bid Price Requirement

We are required to maintain a minimum bid price of $1.00 per share. On January 21, 2026, the Company received a deficiency letter (the “Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, based upon the closing bid price of the Company’s common stock, par value $0.001 per share, for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).

The Notice has no immediate effect on the continued listing status of the Common Stock on The Nasdaq Capital Market, and, therefore, the Company’s listing remains fully effective. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company is provided a compliance period of 180 calendar days from the date of the Notice, or until July 20, 2026, to regain compliance with the Minimum Bid Requirement. To regain compliance, the closing bid price of the Common Stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to July 20, 2026. If the Company is not in compliance with the Minimum Bid Requirement by July 20, 2026, the Company may be afforded a second 180 calendar day compliance period. To qualify for this additional compliance period, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price requirement.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~The~~Not ~~Company~~Applicable. ~~has~~As ~~not~~a ~~engaged~~smaller inreporting ~~trading practices in securities or other financial instruments and therefore does not have any material exposure to interest rate risk~~company, ~~foreign~~we ~~currency~~are ~~exchange rate risk, commodity price risk or other similar risks, which might otherwise result from such practices. The Company has no foreign operations and therefore is~~ not ~~materially~~required ~~subject~~ to ~~fluctuations~~provide inthe ~~foreign~~information ~~exchange~~required ~~rates,~~by ~~commodity~~Item ~~prices or other market rates or prices from market sensitive instruments~~7A.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

See attached Consolidated Financial Statements beginning on page F-1 attached to this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There are no changes in or disagreements with accountants on accounting and financial disclosure.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated under the Exchange Act as of the end of the period covered by this Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report to provide reasonable assurance that material information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms due to the material weakness described below.

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Our management evaluated, with the participation of our ~~chief~~Chief ~~executive~~Executive ~~officer~~Officer and ~~chief~~Chief ~~financial~~Financial ~~officer~~Officer (our “Certifying Officers”), the effectiveness of our ~~disclosure~~internal ~~controls~~control ~~and~~over ~~procedures~~financial reporting as of December 31, ~~2024~~2025, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of the evaluation date, our ~~disclosure~~internal ~~controls~~control ~~and~~over ~~procedures~~financial ~~were~~reporting was not effective due to the following material weaknesses:

●

Lack of sufficient resources necessary to provide adequate segregation of duties related to the preparation and review of financial information used in financial reporting and review of controls over the financial reporting process; and

●

Insufficient IT controls which are effectively designed and implemented, specifically related to user/superuser access to the Company’s financial reporting system.

The deficiencies described above, if not remedied, could result in a misstatement of one or more account balances or disclosures in our annual or interim consolidated financial statements that would not be prevented or detected, and, accordingly, we determined that these control deficiencies constitute a material weakness.

To address our material weakness, we intend to implement new financial accounting controls and processes. We intend to continue to take steps to remediate the material weakness described above through implementing enhancements and controls within our accounting systems, subject to budget limitations. We will not be able to remediate these control deficiencies until these steps have been completed and have been operating effectively for a sufficient period of time and Management has concluded, through testing, that the controls are operating effectively. The redesign and implementation of improvements to our accounting and proprietary systems and controls may be costly and time consuming and the cost to remediate may impair our results of operations in the future.56

65To address our material weakness, we intend to implement new financial accounting controls and processes. We intend to continue to take steps to remediate the material weakness described above through implementing enhancements and controls within our accounting systems, and by hiring qualified personnel with experience and knowledge in accounting and financial reporting, subject to budget limitations. During this year, we hired a new full-time CFO with experience and knowledge in accounting and financial reporting and anticipate hiring additional personnel as resources allow. We will not be able to remediate these control deficiencies until these steps have been completed and have been operating effectively for a sufficient period of time and Management has concluded, through testing, that the controls are operating effectively. The redesign and implementation of improvements to our accounting and proprietary systems and controls may be costly and time consuming and the cost to remediate may impair our results of operations in the future.

In light of the conclusion that our ~~disclosure~~internal ~~controls~~control ~~and~~over ~~procedures~~financial ~~were~~reporting was not effective at December 31, ~~2024~~2025, we have applied particular procedures and processes as necessary to ensure the reliability of our financial reporting with respect to this Report. Accordingly, we believe, based on our knowledge that: (i) this Report does not contain any untrue statement of material fact or omit a statement of material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by this Report; and (ii) the consolidated financial statements, and other financial information included in this Report, fairly present in all material respects our financial condition, results of operations, and cash flows as of and for the periods presented in this Report.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting on December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework, in Internal Control-Integrated Framework.

This Report does not include an attestation report of our registered public accounting firm due to an exemption established by SEC rules for emerging growth companies.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION

Not Applicable.

6657

PART III

ITEM 10. DIRECTORS, ~~EXECUTIVES~~EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table sets forth the name, age as of ~~December~~March 3123, ~~2024~~2026, and position of the individuals who currently serve as our directors and executive officers. The following also includes certain information regarding the individual experience, qualifications, attributes and skills of our directors and executive officers ~~as well as brief statements of those aspects of our directors’ backgrounds that led us to conclude that they are qualified to serve as directors~~.

Name	Age	Position
Executive Officers:
Mark White	6465	President, Chief Executive Officer, ~~Chief Financial Officer,~~ Director
David Owens, M.D.	63	Chief Medical Officer, Director
Justin Van Fleet, CPA	45	Chief Financial Officer
Carolyn Shelton	63	Senior Vice President of Quality, Clinical and Regulatory
David Owens, M.D.	64	Chief Medical Officer, Director
Carolyn Shelton	64	Senior Vice President of Quality, Clinical and Regulatory
Non-Employee Directors:
Leslie Bernhard	8082	Director
Alan Kazden	6465	Director
Ben Hu, M.D.	6768	Director

Executive Officers and Significant Employees

Mark White, President and Chief Executive Officer, ~~Chief Financial Officer~~ Board of Directors

Mr. Mark White has been with Nexalin since 2012, first as an independent consultant from 2012 to 2018, and then as President and Chief Executive Officer from 2018 to present. Mr. White is a versatile health technology executive with over twenty-five years in leadership roles spanning medical device development, clinical operations and business development. Prior to joining Nexalin, he owned and operated his own clinics and addiction centers, where he saw first-hand the positive results the technology achieves. Early in his career, Mr. White spent several years building companies and recruiting successful management teams to accelerate growth across several industries. Mr. White attended the University of Houston where he received a degree in business management.

~~David~~Justin ~~Owens~~Van ~~M.D.~~Fleet, ~~Chief Medical Officer~~CPA, ~~Board~~Chief ofFinancial ~~Directors~~Officer

DrMr. Van ~~David~~Fleet ~~Owens~~ has ~~been~~served ~~with~~as ~~Nexalin since 2017 when he was named~~ Chief ~~Medical~~Financial Officer of ~~the~~Nexalin ~~Company.~~since Dr2025. ~~Owens~~Prior ~~has~~to ~~been~~joining ~~involved~~Nexalin, inMr. Van ~~numerous~~Fleet ~~medical~~was ~~and~~a ~~software~~partner ~~ventures~~in ~~over~~ the ~~past~~assurance ~~decade.~~practice ~~Prior~~of toMarcum ~~joining~~LLP ~~Nexalin,~~and hepredecessor ~~served~~firm ~~with~~Friedman ~~Empiric~~LLP. ~~Systems,~~He ~~LLC,~~has aover ~~software~~twenty ~~company~~years ~~specializing~~of experience in ~~radiology~~public ~~information~~accounting, ~~systems~~including ~~and~~auditing ~~PACS~~life ~~viewing~~sciences ~~systems.~~companies Heon ~~received~~financial areporting, ~~degree~~internal incontrols, ~~chemistry~~ and ~~physics~~regulatory ~~from~~compliance ~~Furman~~matters. ~~University~~Mr. Van ~~and~~Fleet ~~later~~holds a ~~M.D.~~Bachelor of Science degree from the ~~Medical~~State University of ~~South~~New ~~Carolina~~York inat ~~Charleston.~~New HePaltz ~~completed~~and ~~his~~is ~~residency~~a ~~and~~Certified ~~fellowship~~Public atAccountant ~~Emory~~licensed ~~University~~in ~~Hospital~~the inStates ~~Neuroradiology~~of New York and ~~Interventional~~New ~~Neuroradiology~~Jersey.

~~Carolyn~~David ~~Shelton~~Owens M.D., ~~Senior~~Chief ~~Vice~~Medical ~~President of Quality~~Officer, ~~Clinical~~Board ~~and~~of ~~Regulatory~~Directors

~~Carolyn~~Dr. ~~Shelton~~David ~~joined~~Owens ~~the~~has ~~Company~~been inwith ~~September,~~Nexalin ~~2024~~since as2017 ~~its~~when ~~Senior~~he ~~Vice~~was ~~President~~named ofChief ~~Quality,~~Medical ~~Clinical~~Officer ~~and~~of ~~Regulatory~~the Company. ~~She~~Dr. isOwens anhas ~~expert~~been involved in ~~regulatory~~numerous ~~affairs,~~medical ~~clinical~~ and ~~quality~~software ~~assurance~~ventures ~~specializing~~over inthe USpast ~~FDA and international regulatory approvals~~decade. Prior to joining Nexalin, ~~Ms.~~he ~~Shelton~~ served aswith ~~Vice~~Empiric ~~President~~Systems, ~~Regulatory~~LLC, ~~Quality~~a ~~and~~software ~~Clinical~~company ofspecializing ~~Openwater~~in ~~Health,~~radiology ~~LLC,~~information ~~Vice~~systems ~~President,~~and ~~Worldwide~~PACS ~~Regulatory,~~viewing ~~Quality,~~systems. ~~Medical~~He ~~Affairs,~~received ~~and~~a ~~Product~~degree ~~Steward~~in ~~for~~chemistry ~~Advanced~~and ~~Sterilization~~physics ~~Products,~~from ~~Inc.,~~Furman University and ~~Vice~~later ~~President,~~a ~~Regulatory,~~M.D. ~~Quality,~~from the Medical ~~Affairs,~~University ~~and~~of ~~Clinical~~South ~~for~~Carolina ~~Medtronic.~~in MsCharleston. ~~Shelton~~He ~~holds~~completed ahis ~~Bachelor’s~~residency ~~degree~~and fellowship at Emory University Hospital in ~~from~~Neuroradiology ~~Crichton~~and ~~College~~Interventional Neuroradiology.

6758

~~Marilyn~~Carolyn ~~Elson~~Shelton, ~~Controller~~Senior Vice President of Quality, Clinical and Regulatory

Ms. ~~Marilyn~~Carolyn ~~Elson~~Shelton joined ~~Nexalin~~the asCompany ~~Chief Financial Officer~~ in ~~January~~September ~~2022~~2024 ~~and served in that capacity until November 1, 2023. Ms. Elson currently serves~~ as ~~Controller~~its ~~for~~Senior ~~the~~Vice ~~Company.~~President ~~She has been a Certified Public Accountant for approximately 35 years, providing services for a range~~ of ~~clients including real estate partnerships~~Quality, ~~corporations,~~Clinical and ~~high net worth individuals~~Regulatory. ~~Ms.~~She ~~Elson~~ is aan ~~stockholder~~expert ofin ~~the~~regulatory ~~Company.~~affairs, ~~She~~clinical isand aquality ~~member~~assurance ofspecializing in U.S. ~~Asian~~FDA ~~Consulting Group, LLC, which renders advice~~ and ~~consulting~~international ~~services,~~regulatory ~~including~~approvals. ~~services~~Prior to ~~the~~joining ~~Company.~~Nexalin, Ms. ~~Elson~~Shelton ~~co-founded~~served aas ~~boutique~~Vice ~~accounting~~President, ~~firm~~Regulatory, ofQuality ~~which~~and ~~she~~Clinical ~~was~~of aOpenwater ~~member.~~Health, ~~Ms.~~LLC, ~~Elson~~Vice ~~terminated~~President, ~~her~~Worldwide ~~ownership~~Regulatory, ~~status~~Quality, ~~with~~Medical ~~that~~Affairs, ~~firm~~and inProduct ~~order~~Steward ~~to serve as Comptroller~~ for aAdvanced ~~medical~~Sterilization ~~technology~~Products, ~~company~~Inc., ~~guiding~~and ~~the~~Vice ~~company~~President, ~~through~~Regulatory, aQuality, ~~public~~Medical ~~offering~~Affairs, and ~~listing~~Clinical onfor ~~a stock exchange~~Medtronic. Ms. ~~Elson~~Shelton ~~received~~holds a ~~B.A.~~bachelor’s degree in ~~Accounting~~organizational management from ~~Queens~~Crichton College ~~and a M~~.~~S. in Taxation from Pace University.~~

Non-Employee Directors

Leslie Bernhard, Chairman of the Board

Ms. Leslie Bernhard is the founder of AdStar, Inc., an electronic ad intake service to the newspaper industry, and previously served as its president, chief executive officer and executive director. Her current and prior service on other public company boards includes Milestone Scientific, Inc., where in addition to being chair Ms. Bernhard was also interim chief executive officer; Sachem Capital Corp., a Connecticut-based real estate investment trust; Universal Power Group, Inc., a global supplier of power solutions; and ~~Sharp~~Sharplink ~~Link Gaming,~~ Inc., a ~~Minnesota~~leading ~~based~~Ethereum ~~online~~(ETH) ~~performance~~treasury ~~marketing company~~platform. Ms. Bernhard holds a B.S. Degree in Education from St. John’s University.

Alan Kazden

Mr. Alan Kazden was an original investor in Nexalin and has served as a Director since 2019. Mr. Kazden has over 3035 years ofas a CPA with diverse experience consulting with emerging growth companies in strategic business planning, partnering, raising capital, and acting as a virtual CFO. He also has experience as an auditor. Prior to joining Nexalin, Mr. Kazden worked and continues to work in various industries such as technology, manufacturing & distribution, real estate, health care, entertainment, and emerging growth companies. HeMr. Kazden ~~also~~holds ~~previously served as~~ a ~~consultant to the Mayor~~bachelor’s ~~Office~~degree ~~and~~in ~~Los~~business ~~Angeles~~administration ~~City~~from ~~Council~~California onState ~~local~~University, ~~tax~~Long ~~issues~~Beach.

Ben V. Hu M.D.

Dr. Ben V. Hu is a founding investor and shareholder in Nexalin. Dr. Hu is currently in private practice in Ohio, focusing on Ophthalmology. Since 2018, he has advised the Nexalin executive team on market development strategies and clinical trial structures to support marketing and distribution at a global level. Dr. Hu is also an advisor and member of the Board of Directors toof Med-logics Inc., a company developing a surgical technology for cataract surgery utilizing a new patented technology. Dr Hu was awarded his Doctor of Medicine in 1983 from Case Western University and his Chemical Engineering degree from MIT School of Chemical Engineering.

~~Medical~~Family ~~Board Advisors~~Relationships

~~Our~~There ~~Medical~~are ~~Board~~no ~~advises~~family ~~our~~relationships ~~management~~between ~~team~~any ~~in planning, development and execution~~ of ~~scientific,~~our ~~clinical~~directors ~~and~~or ~~research~~executive ~~and development initiatives and strategies~~officers. ~~Our Medical Board consists of experts across a range of key disciplines relevant to our initiatives.~~

~~Our~~Involvement ~~current~~in ~~Medical~~Certain ~~Board~~Legal ~~advisors are:~~Proceedings

~~Abe~~To ~~Scheer~~the best of our knowledge, Mnone of our directors or executive officers were involved in any legal proceedings described in Item 401(f) of Regulation S-K in the past 10 years.D.

Dr. Abraham Scheer specializes in both neurology and psychiatry. Dr. Scheer has over forty years of experience in the field of neurosciences. Dr. Scheer has lectured extensively throughout the United States on neuromodulation devices. Dr. Scheer was part of the Speakers’ Bureau for both Medtronic’s and Cyberonic’s Neuromodulating Divisions. His clinical expertise includes Adult and Child Neurology, Brain Injury Medicine and Adult and Child Psychiatry. Dr. Scheer has trained and worked at the finest medical institutions in the United States, which include Columbia University College of Physicians and Surgeons, Cornell Medical College, George Washington University, Georgetown University, University of Connecticut and the University of Pittsburgh. Dr. Scheer served as Director of Neurology and Stroke Services for Beebe Healthcare in Delaware. He is currently a neurohospitalist/neurointensivist for Bay Health in Delaware. Dr. Scheer is the cousin of our Controller, Marilyn Elson.59

68Board Composition

DrOur Board of Directors currently consists of five members. ~~Scheer~~There ~~and~~are no contractual obligations regarding the ~~Company~~nomination, ~~entered~~appointment, ~~into~~or ~~consulting~~election ~~agreements~~of ~~whereby~~our Drdirectors. ~~Scheer~~Our ~~agreed~~Nominating toand ~~provide~~Corporate ~~consulting~~Governance ~~services~~committee and our Board of Directors may therefore consider a broad range of factors relating to the ~~Company~~qualifications ~~during~~and background of nominees. Our Nominating and Corporate Governance committee’s and our Board of Directors’ priority in selecting board members is identification of persons who will further the ~~year~~interests ~~ended~~of ~~December~~our stockholders through their established record of professional accomplishment, ~~2022.~~the ~~For~~ability ~~his~~to ~~services~~contribute hepositively ~~was~~to ~~compensated~~the ~~with~~collaborative 10culture among board members,~~000~~ ~~shares~~knowledge of ~~common~~our ~~stock~~business, understanding of the ~~Company.~~competitive Drlandscape, professional and personal experiences and expertise relevant to our growth strategy. ~~Scheer’s~~Our ~~agreement~~directors ~~with~~hold office until their successors have been elected and qualified or until the ~~Company~~earlier ~~has~~of ~~expired~~their death, resignation, or removal. ~~The~~Our ~~Company~~Amended and ~~Dr.~~Restated ~~Scheer~~Certificate ~~are~~of ~~discussing~~Incorporation ~~terms~~and Amended and Restated Bylaws provide that our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of the votes that all our stockholders would be entitled to cast in an annual election of directors, and that any vacancy on our board of directors, including a ~~new~~vacancy ~~consulting~~resulting ~~arrangement~~from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.

~~Irene~~Under ~~Cergnul~~certain agreements with U.S. Asian Consulting Group LLC, MU.DS. Asian was granted a right to appoint one director to our Board of Directors. To date, U.S. Asian has not exercised this right.

Dr. Irene Cergnul completed her postgraduate training at Bronx Lebanon Hospital Center in New York and after her final year as Chief Resident was recruited as Assistant Professor/Faculty in the Depart of Family Medicine. She worked as the Medical Director in the in-patient service and taught residents in training for the next four years. She was a Research Coordinator involving multiple studies on HIV, depression, as well as neuropathy, and is a co-author on several publications.Independence

~~Dr.~~Our ~~Cergnul~~Board ~~has~~of ~~been~~Directors ~~involved~~has inundertaken ~~the~~a ~~field~~review of ~~addiction~~its ~~medicine~~composition, ~~HIV~~the ~~care~~composition ~~and~~of ~~mental~~its ~~health~~committees ~~for~~and the ~~last~~independence ~~seventeen~~of ~~years~~each director. ~~She~~Based isupon ~~committed~~information torequested ~~developing~~from and ~~integrating~~provided ~~current~~by each director concerning his or her background, employment and ~~new~~affiliations, ~~modalities~~including family relationships, our board of directors has determined that Ms. Leslie Bernhard, Mr. Alan Kazden and Dr. Ben Hu M.D. have no relationships that would interfere with the exercise of independent judgment in carrying out the ~~treatment~~responsibilities of ~~addictive~~a ~~disorders~~director and ~~has~~that ~~dedicated~~each ~~her~~of ~~working~~these ~~career~~directors tois ~~treating~~“independent” as that term is defined under the ~~underserved~~applicable ~~population~~rules inand NYregulations of the SEC and NJNasdaq. ~~Her~~In ~~private~~making ~~practice~~this ~~focuses~~determination, onour ~~novel~~Board ~~modalities~~of ~~used~~Directors inconsidered ~~treating~~the ~~addiction~~current and ~~dual~~prior ~~diagnosis~~relationships ~~patients~~that ~~and~~each non-employee director has ~~successfully~~with ~~incorporated~~our ~~Nexalin~~company asand anall ~~integral~~other ~~part~~facts and circumstances our Board of Directors deemed relevant in determining his or her ~~treatment~~independence, ~~armamentarium~~including the beneficial ownership of our share capital held by each non-employee director.

~~Nancy~~Committees ~~White,~~of ~~Ph.D.~~the Board of Directors

~~Dr.~~Our ~~Nancy~~Board ~~White is the Clinical Director~~ of ~~Unique~~Directors ~~Mind~~has ~~Care~~established ~~in Houston, Texas. She is recognized as~~ an ~~industry~~Audit ~~leader~~Committee, ina ~~the~~Compensation ~~development~~Committee ofand a ~~brain-based~~Nominating ~~approach~~and toCorporate ~~support~~Governance ~~neurobehavioral~~Committee, ~~wellness.~~each ~~Dr.~~of ~~White~~which ~~has~~will ~~specialized~~have in the ~~diagnosis~~composition and ~~treatment~~responsibilities ofdescribed ~~functional brain disorders for more than twenty years~~below. ~~She~~From istime ato ~~Fellow~~time, ~~past President and Board member of~~ the ~~International~~board ~~Society~~may ~~for~~establish ~~Neurofeedback~~other ~~and~~committees ~~Research~~to ~~(ISNR),~~facilitate ~~a Certified EEG Fellow of~~ the ~~Biofeedback~~oversight ~~Certification International Alliance (BCN) and a QEEG Diplomate and member~~ of ~~the~~our ~~Quantitative EEG Certification Board~~business. ~~Dr.~~The ~~White~~charters isfor aeach ~~licensed Clinical Psychologist in the State~~ of ~~Texas~~our ascommittees ~~well~~is asavailable anon ~~Advanced~~our ~~Addictions~~website ~~Counselor~~at https://nexalin.com.

~~Dr.~~Audit White is a pioneer in the practical application of neuroscientific research to clinical practice, including the extension of advanced brain-based therapies to all psychiatric mood disorders including Post-Traumatic Stress, Autism and Addictions. She is a frequent presenter of her work at conferences, including the American Academy of Anti-Aging Medicine, the International Society for Neurofeedback and Research, the Association for Applied Psychophysiology and Biofeedback, Future Health and the National Academy of Neuropsychology. She also serves as a consulting editor of the Journal of Neurotherapy (Taylor and Francis).Committee

DrOur Audit Committee is composed of our three independent directors, Leslie Bernhard, Alan Kazden and Ben Hu M.D. ~~White~~Our Board of Directors has ~~dedicated~~determined ~~seven~~that ~~years~~each toof these persons are independent within the ~~development~~meaning of applicable Nasdaq listing requirements and the ~~clinical~~independence ~~application~~requirements ofcontemplated by Rule 10A-3 under the ~~Nexalin~~Exchange ~~therapy~~Act. ~~Her~~Leslie ~~research~~Bernhard ~~and~~is ~~clinical~~the ~~data~~Chair onof the ~~use~~Audit ofCommittee; ~~Nexalin~~our ~~therapy~~Board of Directors has ~~been~~determined ~~presented~~that atshe ~~international~~is ~~conferences.~~an Dr“audit committee financial expert” as defined by SEC rules and regulations. ~~White~~Our isBoard of Directors has determined that the ~~mother~~composition of our ~~Chief~~Audit ~~Executive~~Committee ~~Officer~~meets the criteria for independence under, ~~Mark~~and ~~White~~the functioning of our Audit Committee complies with, the applicable requirements of the Sarbanes-Oxley, applicable Nasdaq listing requirements and SEC rules and regulations. We intend to continue to evaluate the requirements applicable to us and we intend to comply with the future requirements to the extent that they become applicable to our Audit Committee. The principal duties and responsibilities of our Audit Committee include:

~~Non-Medical~~● ~~Board~~appointing ofand ~~Advisors~~retaining an independent registered public accounting firm to serve as independent auditor to audit our financial statements, overseeing the independent auditor’s work and determining the independent auditor’s compensation;

~~Nexalin~~● ~~has~~approving also established a non-medical Board of Advisors. The members of the Board of Advisors serve at the request of the Board and advise and make recommendations with respect to the strategic direction of the company and similar matters. The members of the Board of Advisors do not have, or shall be deemed to have, a fiduciary relationship in ~~respect~~advance ofall ~~the~~audit ~~company.~~services ~~The members of the Board of Advisors are set forth below. We have entered into agreements with each member of the Board of Advisors, which set forth the terms~~ and ~~conditions~~non-audit ~~relating~~services to ~~the individual’s service on the Board of Advisors. The agreements provide for an initial one-year term, which can~~ be ~~extended~~provided for an additional year. The agreements commenced December 24, 2021, and include confidentiality and protection of Company’s intellectual property, and indemnification protection. Under the agreements, each advisor is entitled to ~~receive~~us ~~$80,000~~by ~~worth of~~ our ~~Common~~independent Stock. The value of the shares issuable is $5.00 per share, which was the price of our common stock based upon transactions with unaffiliated third parties at such time. We did not have any formal agreements with the members of our Board of Advisors for fiscal 2023 or 2024 and no compensation expense for fiscal 2023 or 2024.auditor;

69● establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls, auditing or compliance matters, as well as for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

~~Tucker Anderson~~60

~~Tucker~~● ~~Andersen~~reviewing ~~spent~~and ~~twenty-seven~~discussing ~~years~~ with ~~the~~management private investment partnership Cumberland Associates, including fifteen years as a co-managing partner of the firm. Subsequent to his retirement from that position, he founded Above All Advisors, a consulting and ~~investment~~our ~~firm.~~independent Heauditor is on several advisory and private company boards, including Questech Corporation, Value Insight Partners, and Artificial Cell Technologies. He received his B.A. in Quantitative Studies from Wesleyan University in 1963. Tucker is the ~~recipient~~results of ~~both~~ the ~~Wesleyan~~annual ~~Distinguished~~audit ~~Alumnus Award~~ and the ~~Exeter~~independent ~~Founder~~auditor’s ~~Day~~review ~~Award. He is both a Chartered Financial Analyst and an Associate Member~~ of ~~the~~our ~~Society~~quarterly offinancial ~~Actuaries.~~statements;

~~Leonard~~● ~~Osser~~conferring with management and our independent auditor about the scope, adequacy and effectiveness of our internal accounting controls, the objectivity of our financial reporting and our accounting policies and practices; and

~~Leonard~~● ~~Osser~~reviewing ~~has~~and ~~been~~approving aany ~~Director~~related ofparty ~~Milestone~~transaction ~~Scientific,~~required ~~Inc.~~to ~~since~~be hedisclosed ~~founded~~pursuant ~~that company in 1989. He served as Chief Executive Officer of Milestone Scientific from the time of its founding until 2021, other than twice during the last 20 years when he intended~~ to ~~retire~~Item ~~from~~404 ~~that position. He served as Chairman~~ of ~~Milestone~~Regulation ~~Scientific from 1991 until September 2009 at which time he resigned as Chairman of Milestone Scientific but remained a director. Mr. Osser serves as Managing Member of U.~~S.-K ~~Asian~~promulgated ~~Consulting~~by ~~Group~~the ~~LLC,~~SEC ~~which~~prior ~~provides various consulting services~~ to ~~the~~us ~~Company.~~entering ~~Mr. Osser~~into issuch ~~a shareholder of the Company~~transactions. ~~He is a member of our non-medical Board of Advisors and serves as Director of China operations.~~

~~Gian~~Compensation ~~Domenico Trombetta~~Committee

~~Gian~~Our ~~Domenico~~Compensation ~~Trombetta~~Committee ~~has~~is ~~been~~composed ~~the~~of ~~President~~three directors, Alan Kazden, Leslie Bernhard and ~~CEO~~Ben Hu, M.D., each of ~~Innovest~~whom Sis a non-employee member of our board of directors as defined in Rule 16b-3 under the Exchange Act.p Alan Kazden is the Chair of the Compensation Committee.A. anOur ~~Italian~~Board ~~corporation~~of ~~specializing~~Directors inhas ~~private~~determined ~~equity~~that the composition of our Compensation Committee satisfies the applicable independence requirements under, and ~~distressed~~the ~~assets~~functioning ~~since~~of ~~1992.~~our HeCompensation ~~was~~Committee ~~previously~~complies with ~~Booz~~the ~~Allen~~applicable &requirements ~~Hamilton~~of ~~Inc.~~Nasdaq ~~focusing~~listing onrules ~~strategy~~ and ~~acquisition~~

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