What changed in Aclarion, Inc.'s 2023 10-K compared to 2022?

Across the narrative sections we track, Aclarion, Inc. (ACON) added 320 paragraphs, removed 304, and edited 225 between the 2022 and 2023 10-K filings. The biggest movers are Item 1. Business (+258/−242), Item 7. Management's Discussion & Analysis (+52/−44), Item 5. Market for Registrant's Common Equity (+9/−17).

What changed in Aclarion, Inc.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 52 new/edited paragraphs and 44 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this ACON 10-K diff come from?

The source filings are Aclarion, Inc.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

Aclarion, Inc.ACONEarnings & Financial Report

Nasdaq · Health Care · Services-Medical Laboratories

Deep Analysis

Aclarion, Inc. is a medical technology company focused on developing non-invasive solutions for chronic lower back pain diagnosis and treatment. Its core offerings leverage proprietary magnetic resonance spectroscopy technology to accurately identify painful intervertebral discs, serving healthcare providers and patients across the United States, with key focus on the chronic pain management and spinal care segments.

What changed in Aclarion, Inc.'s 10-K — 2022 vs 2023

Top changes in Aclarion, Inc.'s 2023 10-K

320 paragraphs added · 304 removed · 225 edited across 4 sections

Item 1. Business+258 / −242 · 193 edited
Item 7. Management's Discussion & Analysis+52 / −44 · 30 edited
Item 5. Market for Registrant's Common Equity+9 / −17 · 1 edited
Item 7A. Quantitative and Qualitative Disclosures About Market Risk+1 / −1 · 1 edited

Item 1. Business

Business — how the company describes what it does

193 edited+65 added−49 removed756 unchanged

2022 filing

2023 filing

In addition, recent evidence has shown that the action of inserting a needle into a normal disc during a discogram procedure leads to an increased rate of degeneration in these previously normal discs.

These and other risks associated with international operations that may harm our ability to attain or maintain profitable operations internationally, which would harm our growth potential. Furthermore, there are foreign privacy laws and regulations that impose restrictions on the collection, use, storage, disclosure, transfer and other processing of personal data, including health information.

These and other risks associated with international operations may harm our ability to attain or maintain profitable operations internationally, which would harm our growth potential. Furthermore, there are foreign privacy laws and regulations that impose restrictions on the collection, use, storage, disclosure, transfer and other processing of personal data, including health information.

This could result in the delay or rejection by the FDA. Any such delay or rejection could prevent us from supporting label retention and expansion for our products. A failure to comply with governmental regulatory requirements would have a negative impact upon our business.

This could result in delay or rejection by the FDA. Any such delay or rejection could prevent us from supporting label retention and expansion for our products. A failure to comply with governmental regulatory requirements would have a negative impact upon our business.

Any of the foregoing could harm our business, financial condition and results of operations.

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 negative impact on our common stock price.

Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could harm our ability to compete in the marketplace, including ability to hire new employees or contract with independent sales representatives. Additionally, we may lose valuable intellectual property rights or personnel. Any of the foregoing could harm our business, financial condition and results of operations.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could harm our ability to compete in the marketplace, including the ability to hire new employees or contract with independent sales representatives. Additionally, we may lose valuable intellectual property rights or personnel. Any of the foregoing could harm our business, financial condition and results of operations.

For example: · others may be able to make products that are similar to our products or utilize similar technology but that are not covered by the claims of our patents or that incorporate certain technology in our products that is in the public domain; · our intellectual property strategy may be limited, we may not seek protection for intellectual property that may ultimately become relevant to our business or our invention disclosure process may prove insufficient to encourage inventors to come forward with protectable intellectual property; · we, or our current or future licensors or collaborators, might not have been the first to make the inventions related to the applicable issued patent or pending patent application assigned or licensed to us now or in the future; · we, or our current or future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; · we, or our current or future licensors or collaborators, may fail to meet our obligations to the U.S. government regarding any future patents and patent applications funded by U.S. government grants, leading to the loss or unenforceability of patent rights; · others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; · it is possible that our current or future pending patent applications will not lead to issued patents; · it is possible that there are prior public disclosures that could invalidate our patents, or parts of our patents; · it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims related to our products or technology similar to ours; · it is possible that our patents or patent applications omit individuals that should be listed as inventors or include individuals that should not be listed as inventors, which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; · issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; · the claims of our patents or patent applications, if and when issued, may not cover our products or technologies; · the laws of foreign countries may not protect our proprietary rights or the rights of current or future licensors or collaborators to the same extent as the laws of the United States; · the inventors of our patents or patent applications may become involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors; · our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; · we have engaged in scientific collaborations in the past and will continue to do so in the future and our collaborators may develop adjacent or competing products that are outside the scope of our patents; · we may not develop additional proprietary technologies that are patentable; · our trade secrets may be misappropriated, without an ability to know or reverse engineer the misappropriation, or we may lose trade secret protections based on a failure to properly establish or maintain them; · certain employees, consultants, or other collaborators may be engaged on terms that do not prevent them from inventing improvements, modifications, alterations, derivations of our technologies and methods, or otherwise from inventing alternative or new technologies or methods and pursuing them outside of and competitive with the company; · the patents of others may harm our business; or · we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property, and thereby potentially preventing us from continuing to use those related technologies or practice those related methods.

For example: · others may be able to make products that are similar to our products or utilize similar technology but that are not covered by the claims of our patents or that incorporate certain technology in our products that is in the public domain; · our intellectual property strategy may be limited, we may not seek protection for intellectual property that may ultimately become relevant to our business, or our invention disclosure process may prove insufficient to encourage inventors to come forward with protectable intellectual property; · we, or our current or future licensors or collaborators, might not have been the first to make the inventions related to the applicable issued patent or pending patent application assigned or licensed to us now or in the future; · we, or our current or future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; · we, or our current or future licensors or collaborators, may fail to meet our obligations to the U.S. government regarding any future patents and patent applications funded by U.S. government grants, leading to the loss or unenforceability of patent rights; · others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; · it is possible that our current or future pending patent applications will not lead to issued patents; · it is possible that there are prior public disclosures that could invalidate our patents, or parts of our patents; · it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims related to our products or technology similar to ours; · it is possible that our patents or patent applications omit individuals that should be listed as inventors or include individuals that should not be listed as inventors, which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; · issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; · the claims of our patents or patent applications, if and when issued, may not cover our products or technologies; · the laws of foreign countries may not protect our proprietary rights or the rights of current or future licensors or collaborators to the same extent as the laws of the United States; · the inventors of our patents or patent applications may become involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors; · our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; · we have engaged in scientific collaborations in the past and will continue to do so in the future and our collaborators may develop adjacent or competing products that are outside the scope of our patents; · we may not develop additional proprietary technologies that are patentable; · our trade secrets may be misappropriated, without an ability to know or reverse engineer the misappropriation, or we may lose trade secret protections based on a failure to properly establish or maintain them; 69 · certain employees, consultants, or other collaborators may be engaged on terms that do not prevent them from inventing improvements, modifications, alterations, derivations of our technologies and methods, or otherwise from inventing alternative or new technologies or methods and pursuing them outside of and competitive with the company; · the patents of others may harm our business; or · we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property, and thereby potentially preventing us from continuing to use those related technologies or practice those related methods.

Improvements in processing raw MRS data incorporated in Aclarion IP are summarized below: 1) Introducing novel signal processing approaches for enhanced reliability of the underlying spectra and related chemical biomarker ‘peak’ measurements: a) increased signal noise ratio or “SNR” for more reliably identifying and measuring chemical peaks - in particular, by averaging spectra from multiple acquisitions using (i) only strong acquired signals and filtering out weak ones (“frame editing”), and (ii) a “smart” form of frequency shift correction to align multiple acquisitions for “coherent” averaging; and 13 b) detecting spectral artifacts that might compromise the reliability of spectral peak measurements and related chemical measurements, and which can occasionally result from technical issues during MRS exams in the scanner (generally observed in 2) Basing diagnostic results on relative, normalized comparisons of the differences between chemical biomarkers for multiple different disc tissues in the same patient vs. assigning diagnostic thresholds for chemical measurements that are empirically derived from a separate clinical trial patient population and are not patient specific. 3) Evaluating only multi-chemical “degenerative pain” biomarkers that use ratios between spectral peaks for chemicals associated with (i) pain and (ii) structural degeneration, thus providing for: (a) a two-fold and bi-directional sensitivity in the combined biomarker from both the ratio’s numerator (pain biomarker) and its denominator (structural degeneration biomarker), and (b) reduction of patient anatomy-dependent variables in the MRS data to thereby enhance the personalization of the data and increase the generalizability of the diagnostic algorithms across diverse populations. 4) Using multi-peak spectral ranges, representing multiple different painful acids, as a single pain biomarker used in the combined ratios for degenerative pain biomarkers (e.g.

Improvements in processing raw MRS data incorporated in Aclarion IP are summarized below: 1) Introducing novel signal processing approaches for enhanced reliability of the underlying spectra and related chemical biomarker ‘peak’ measurements: a) increased signal noise ratio or “SNR” for more reliably identifying and measuring chemical peaks - in particular, by averaging spectra from multiple acquisitions using (i) only strong acquired signals and filtering out weak ones (“frame editing”), and (ii) a “smart” form of frequency shift correction to align multiple acquisitions for “coherent” averaging; and b) detecting spectral artifacts that might compromise the reliability of spectral peak measurements and related chemical measurements, and which can occasionally result from technical issues during MRS exams in the scanner (generally observed in 2) Basing diagnostic results on relative, normalized comparisons of the differences between chemical biomarkers for multiple different disc tissues in the same patient vs. assigning diagnostic thresholds for chemical measurements that are empirically derived from a separate clinical trial patient population and are not patient specific. 3) Evaluating only multi-chemical “degenerative pain” biomarkers that use ratios between spectral peaks for chemicals associated with (i) pain and (ii) structural degeneration, thus providing for: (a) a two-fold and bi-directional sensitivity in the combined biomarker from both the ratio’s numerator (pain biomarker) and its denominator (structural degeneration biomarker), and (b) reduction of patient anatomy-dependent variables in the MRS data to thereby enhance the personalization of the data and increase the generalizability of the diagnostic algorithms across diverse populations. 4) Using multi-peak spectral ranges, representing multiple different painful acids, as a single pain biomarker used in the combined ratios for degenerative pain biomarkers (e.g.

Our conclusion that NOCISCAN would be considered Clinical Decision Support software (“CDS”), which under the 21st Century Cures Act’ is not a device and therefore exempted from medical device regulation,” is based upon the following analysis: 23 Under the Cures Act provision, a software product is not considered a device if it meets the following four elements: · "[Not] intended to acquire, process, or analyze a medical image or a signal from an in vitro diagnostic device or a pattern or signal from a signal acquisition system;" · "[I]ntended ... for the purpose of... displaying, analyzing, or printing medical information about a patient or other medical information (such as peer-reviewed clinical studies and clinical practice guidelines);" · "[I]ntended ... for the purpose of... supporting or providing recommendations to a health care professional about prevention, diagnosis, or treatment of a disease or condition;" and · "[I]ntended ... for the purpose of... enabling such health care professional to independently review the basis for such recommendations that such software presents so that it is not the intent that such health care professional rely primarily on any of such recommendations to make a clinical diagnosis or treatment decision regarding an individual patient." 4 Since December 13, 2016, the FDA has issued draft guidance which provides further insight into the interpretation of the above four elements.

Our conclusion that NOCISCAN would be considered Clinical Decision Support software (“CDS”), which under the 21st Century Cures Act’ is not a device and therefore exempted from medical device regulation,” is based upon the following analysis: Under the Cures Act provision, a software product is not considered a device if it meets the following four elements: · "[Not] intended to acquire, process, or analyze a medical image or a signal from an in vitro diagnostic device or a pattern or signal from a signal acquisition system;" · "[I]ntended ... for the purpose of... displaying, analyzing, or printing medical information about a patient or other medical information (such as peer-reviewed clinical studies and clinical practice guidelines);" · "[I]ntended ... for the purpose of... supporting or providing recommendations to a health care professional about prevention, diagnosis, or treatment of a disease or condition;" and · "[I]ntended ... for the purpose of... enabling such health care professional to independently review the basis for such recommendations that such software presents so that it is not the intent that such health care professional rely primarily on any of such recommendations to make a clinical diagnosis or treatment decision regarding an individual patient." 4 Since December 13, 2016, the FDA has issued draft guidance which provides further insight into the interpretation of the above four elements.

We believe that our NOCISCAN product suite is superior to currently known competition in this market as follows: · We believe we are superior to standard lumbar MRI because: o Standard lumbar MRI only indicates structural defects, degeneration, and hydration, which have not been well correlated to identifying painful discs in DLBP patients, whereas our products have been highly correlated to pain as indicated by positive Provocation Discogram results in a clinical trial published in a major peer-reviewed spine journal; o Standard lumbar MRI does not identify nor allow for measuring levels of acidic chemicals, such as lactic acid, that have been identified as a source of causing discs to become painful, and which we both identify and measure objectively and quantitatively; and o Patient outcomes from surgeries following standard lumbar MRI diagnosis, but without the benefit of or following our diagnosis, have resulted in a much lower 90% success rates shown for patient outcomes following surgeries that treat painful discs identified via our diagnostic products, as also demonstrated in the same published clinical trial referenced above. · We believe we are superior to standard Provocation Discogram (PD) because: o PD is highly invasive, whereas our test is entirely non-invasive; o PD is painful by deliberate design, whereas our test is entirely pain-free; o PD has certain risks of harm, including certain reports of >1% risk of infection and increased risks of accelerating degeneration and/or herniation rates in discs after receiving needle injections form PD, whereas our test is non-significant risk and no more risky that standard lumbar MRI or other applications of MRS; 30 o PD is subjective, based both on patient reporting of subjective pain and physician subjectivity in interpreting results, whereas our test is entirely objective; and o PD is often performed, for optimal reliability and accuracy, with a CT scan to evaluate the distribution of injected dye in and around the disc, which requires a second diagnostic imaging exam and additional related costs, and which also exposes the patient to radiation, whereas our test is only a single exam, is more cost effective, and is entirely radiation free.

We believe that our NOCISCAN product suite is superior to currently known competition in this market as follows: · We believe we are superior to standard lumbar MRI because: o Standard lumbar MRI only indicates structural defects, degeneration, and hydration, which have not been well correlated to identifying painful discs in DLBP patients, whereas our products have been highly correlated to pain as indicated by positive Provocation Discogram results in a clinical trial published in a major peer-reviewed spine journal; o Standard lumbar MRI does not identify nor allow for measuring levels of acidic chemicals, such as lactic acid, that have been identified as a source of causing discs to become painful, and which we both identify and measure objectively and quantitatively; and o Patient outcomes from surgeries following standard lumbar MRI diagnosis, but without the benefit of or following our diagnosis, have resulted in a much lower 90% success rates shown for patient outcomes following surgeries that treat painful discs identified via our diagnostic products, as also demonstrated in the same published clinical trial referenced above. 31 · We believe we are superior to standard Provocation Discogram (PD) because: o PD is highly invasive, whereas our test is entirely non-invasive; o PD is painful by deliberate design, whereas our test is entirely pain-free; o PD has certain risks of harm, including certain reports of >1% risk of infection and increased risks of accelerating degeneration and/or herniation rates in discs after receiving needle injections form PD, whereas our test is non-significant risk and no more risky that standard lumbar MRI or other applications of MRS; o PD is subjective, based both on patient reporting of subjective pain and physician subjectivity in interpreting results, whereas our test is entirely objective; and o PD is often performed, for optimal reliability and accuracy, with a CT scan to evaluate the distribution of injected dye in and around the disc, which requires a second diagnostic imaging exam and additional related costs, and which also exposes the patient to radiation, whereas our test is only a single exam, is more cost effective, and is entirely radiation free.

We believe the following strategies will contribute to growth in the prescription and use of NOCISCAN. · Enhance our multi-tiered sales/marketing/branding campaign targeted at (i) referring physicians, (ii) MR imaging providers, (iii) DLBP patients, (iv) spine implant equipment suppliers, (v) injectable biologics and cell therapy providers, (vi) MR scanner vendors, (vii) third party payors, and (viii) employers, all to grow awareness and demand for NOCISCAN; · Increase third party payer reimbursement coverage via reimbursement code utilization, payer negotiations, growing clinical evidence dossier via published registry studies and Randomized Control Trials (“RCT”), and converting temporary Category III CPT codes into permanent CPT Category I codes see “Third Party Reimbursement ” below; · Expand MR scanner compatibility to additional scanner models, including within the Siemens product lines and other manufacturers/vendors; · Expand into international markets; 16 · Evolve the adaptations and positioning of our products to support new emerging technologies, and clinical trials, in particular for injectable biologic and cell therapies; · Continue to conduct clinical trials, and publish clinical trial results in peer-reviewed journals in relevant fields to our business (e.g.

We believe the following strategies will contribute to growth in the prescription and use of NOCISCAN. · Enhance our multi-tiered sales/marketing/branding campaign targeted at (i) referring physicians, (ii) MR imaging providers, (iii) DLBP patients, (iv) spine implant equipment suppliers, (v) injectable biologics and cell therapy providers, (vi) MR scanner vendors, (vii) third party payors, and (viii) employers, all to grow awareness and demand for NOCISCAN; · Increase third party payer reimbursement coverage via reimbursement code utilization, payer negotiations, growing clinical evidence dossier via published registry studies and Randomized Control Trials (“RCT”), and converting temporary Category III CPT codes into permanent CPT Category I codes see “Third Party Reimbursement ” below; · Expand MR scanner compatibility to additional scanner models, including within the Siemens product lines and other manufacturers/vendors; · Expand into international markets; 17 · Evolve the adaptations and positioning of our products to support new emerging technologies, and clinical trials, in particular for injectable biologic and cell therapies; · Continue to conduct clinical trials, and publish clinical trial results in peer-reviewed journals in relevant fields to our business (e.g.

For further discussion of the risks relating to intellectual property, see the section titled “Risk factors — Risks Related to our Intellectual Property.” The Company holds the following trademarks for its previous corporate brand name as well as for its key products and brands (“®” designates registered trademark, “™” designates unregistered trademark under common law protection): NOCIMED®Corporate brand name NOCISCAN® - Primary data acquisition exam (procedure) and software-based post-processing suite (product) NOCIGRAM® - Post-processed report, one of two products in the NOCISCAN product suite NOCISCORE® - Feature of NOCIGRAM Report NOCICALC™ - MRS spectral processor and biomarker calculator, one of two products in the NOCISCAN suite NOCI+™ - Feature of NOCIGRAM Report NOCI-™ - Feature of NOCIGRAM Report NOCImild™ - Feature of NOCIGRAM Report NOCIWEB™ - Web-hosted user interface SI-SCORE™ - Feature of NOCIGRAM Report VIRTUAL DISCOGRAM™ - Additional name associated with NOCIGRAM With respect to involved meanings, the recurrent prefix term “NOCI” among these marks is derived from Latin origins for “ pain ” (e.g. nerves that report pain are called “ noci ceptors”) 21 Research and Development Research and Development (“R&D”) activities at Aclarion primarily explore the use of AI, our post-processing technologies and clinical registry data to expand the use of our technology.

For further discussion of the risks relating to intellectual property, see the section titled “Risk factors — Risks Related to our Intellectual Property.” 22 The Company holds the following trademarks for its previous corporate brand name as well as for its key products and brands (“®” designates registered trademark, “™” designates unregistered trademark under common law protection): NOCIMED®Corporate brand name NOCISCAN® - Primary data acquisition exam (procedure) and software-based post-processing suite (product) NOCIGRAM® - Post-processed report, one of two products in the NOCISCAN product suite NOCISCORE® - Feature of NOCIGRAM Report NOCICALC™ - MRS spectral processor and biomarker calculator, one of two products in the NOCISCAN suite NOCI+™ - Feature of NOCIGRAM Report NOCI-™ - Feature of NOCIGRAM Report NOCImild™ - Feature of NOCIGRAM Report NOCIWEB™ - Web-hosted user interface SI-SCORE™ - Feature of NOCIGRAM Report VIRTUAL DISCOGRAM™ - Additional name associated with NOCIGRAM With respect to involved meanings, the recurrent prefix term “NOCI” among these marks is derived from Latin origins for “ pain ” (e.g. nerves that report pain are called “ noci ceptors”) Research and Development Research and Development (“R&D”) activities at Aclarion primarily explore the use of AI, our post-processing technologies and clinical registry data to expand the use of our technology.

FDA regulations and regulations of similar agencies are wide-ranging and include, among other things, oversight of: · product design, development, manufacturing (including suppliers) and testing; · laboratory, preclinical and clinical studies; · product safety and effectiveness; · product labeling; · product storage and shipping; · quality assurance policies, practices, and record keeping; · pre-market clearance or approval; · marketing, advertising and promotion; · product sales and distribution; · product changes; · product recalls; and · post-market surveillance and reporting of deaths, serious injuries, certain malfunctions, and related corrective actions. 47 Further, improvements of our existing technology, any potential new technology, and new indications for use of our current technology may be subject to extensive regulation, and we may require permission from regulatory agencies and ethics boards to conduct clinical studies, as well as clearance or approval from the FDA, or other such foreign regulatory agencies or governing bodies, prior to commercial sale.

FDA regulations and regulations of similar agencies are wide-ranging and include, among other things, oversight of: · product design, development, manufacturing (including suppliers) and testing; · laboratory, preclinical and clinical studies; · product safety and effectiveness; · product labeling; · product storage and shipping; · quality assurance policies, practices, and record keeping; · pre-market clearance or approval; · marketing, advertising and promotion; · product sales and distribution; · product changes; · product recalls; and · post-market surveillance and reporting of deaths, serious injuries, certain malfunctions, and related corrective actions. 48 Further, improvements of our existing technology, any potential new technology, and new indications for use of our current technology may be subject to extensive regulation, and we may require permission from regulatory agencies and ethics boards to conduct clinical studies, as well as clearance or approval from the FDA, or other such foreign regulatory agencies or governing bodies, prior to commercial sale.

If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and commercialization efforts. 35 We have incurred significant net losses since inception and anticipate that we will continue to incur net losses for the foreseeable future and may never achieve or maintain profitability.

If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our technology development and commercialization efforts. We have incurred significant net losses since inception and anticipate that we will continue to incur net losses for the foreseeable future and may never achieve or maintain profitability.

In December 2021, NuVasive’s convertible notes were converted into Series B-3 preferred shares. Products and Solutions Aclarion has developed a software application called NOCISCAN®. The product uses the existing MRS capabilities of many commercially available scanners to non-invasively analyze the chemical makeup of intervertebral discs in the spine.

In December 2021, NuVasive’s convertible notes were converted into Series B-3 preferred shares. 11 Products and Solutions Aclarion has developed a software application called NOCISCAN®. The product uses the existing MRS capabilities of many commercially available scanners to non-invasively analyze the chemical makeup of intervertebral discs in the spine.

The loss of members of our senior management, marketing professionals, engineers, scientists and clinical trial specialists could result in delays in product development and harm our business. 37 Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms, or at all.

The loss of members of our senior management, marketing professionals, engineers, scientists and clinical trial specialists could result in delays in product development and harm our business. Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms, or at all.

Coverage and Reimbursement. Government and private sector initiatives to limit the growth of healthcare costs, including price regulation and competitive pricing, coverage and payment policies, comparative effectiveness therapies, technology assessments and managed care arrangements, are continuing in many countries where we do business, including the United States, Europe and Asia.

Government and private sector initiatives to limit the growth of healthcare costs, including price regulation and competitive pricing, coverage and payment policies, comparative effectiveness therapies, technology assessments and managed care arrangements, are continuing in many countries where we do business, including the United States, Europe and Asia.

Aclarion provides MR imaging providers two options for data transfer: (1) a licensed proprietary imaging data transfer platform provided by AMBRA® Healthcare, and (2) NOCIWEB®, a custom developed web-interface developed and offered by Aclarion. (c) The NOCISCAN Post-Processor Suite : This comprises the products that Aclarion currently markets and sells.

Aclarion provides MR imaging providers two options for data transfer: (1) a licensed proprietary imaging data transfer platform provided by AMBRA® Healthcare, and (2) NOCIWEB®, a custom developed web-interface developed and offered by Aclarion. 12 (c) The NOCISCAN Post-Processor Suite : This comprises the products that Aclarion currently markets and sells.

Even if we successfully defend any such allegation or claim, this could involve significant risk of liability exposure and significant cost and diversion of resources and focus. 70 If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit or halt commercialization of our products.

Even if we successfully defend any such allegation or claim, this could involve significant risk of liability exposure and significant cost and diversion of resources and focus. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit or halt commercialization of our products.

Actual or perceived security breaches or failures could also cause financial losses, increased costs, interruptions in the operations of our businesses, misappropriation of assets, significant damage to our brand and reputation with customers, patients, employees, and third parties with whom we do business, and result in adverse publicity, loss of consumer confidence, distraction to our management, and reduced sales and profits, any or all of which could harm our business, financial condition and results of operations. 54 Our technology is also subject to compromise from internal threats, such as theft, misuse, unauthorized access or other improper actions by employees, service providers and other third parties with otherwise legitimate access to our systems and website.

Actual or perceived security breaches or failures could also cause financial losses, increased costs, interruptions in the operations of our businesses, misappropriation of assets, significant damage to our brand and reputation with customers, patients, employees, and third parties with whom we do business, and result in adverse publicity, loss of consumer confidence, distraction to our management, and reduced sales and profits, any or all of which could harm our business, financial condition and results of operations. 55 Our technology is also subject to compromise from internal threats, such as theft, misuse, unauthorized access or other improper actions by employees, service providers and other third parties with otherwise legitimate access to our systems and website.

It does this by providing additional disc chemistry-based information to be considered by the physician in combination with other available patient information. 24 The fourth element of the statute is also met by NOCIGRAM, although the requirements for this element are more involved than the other three elements.

It does this by providing additional disc chemistry-based information to be considered by the physician in combination with other available patient information. The fourth element of the statute is also met by NOCIGRAM, although the requirements for this element are more involved than the other three elements.

To the extent we engage in clinical studies and commercial uses of our products outside the United States, we may implicate foreign data privacy and security laws and regulations, including the GDPR and legislation of the European Union member states implementing it. 55 To the extent we do business in international markets now, and in the future, any failure by us or our third-party contractors to comply with the strict rules on the transfer of personal data from outside of the European Union, the United Kingdom, or other foreign country or territory into the United States in accordance with such laws and regulations may result in the imposition of criminal and administrative sanctions on such contractors, which could adversely affect our sales, business, financial condition, and results of operations.

To the extent we engage in clinical studies and commercial uses of our products outside the United States, we may implicate foreign data privacy and security laws and regulations, including the GDPR and legislation of the European Union member states implementing it. 56 To the extent we do business in international markets now, and in the future, any failure by us or our third-party contractors to comply with the strict rules on the transfer of personal data from outside of the European Union, the United Kingdom, or other foreign country or territory into the United States in accordance with such laws and regulations may result in the imposition of criminal and administrative sanctions on such contractors, which could adversely affect our sales, business, financial condition, and results of operations.

Further, we may not be able to obtain adequate remedies for any breach. 69 Our inability to use software licensed from third parties, or our use of open source software under license terms that interfere with our proprietary rights, could disrupt our business.

Further, we may not be able to obtain adequate remedies for any breach. Our inability to use software licensed from third parties, or our use of open-source software under license terms that interfere with our proprietary rights, could disrupt our business.

The regulatory framework for data privacy and security worldwide is continuously evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. 51 We are subject to many diverse laws and regulations relating to data privacy and security.

The regulatory framework for data privacy and security worldwide is continuously evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. We are subject to many diverse laws and regulations relating to data privacy and security.

These laws also address the improper use of information obtained in the course of patient recruitment for clinical studies. 53 We have adopted a code of conduct, employee handbook, and compliance policies, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these 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 be in compliance with such laws or regulations.

These laws also address the improper use of information obtained in the course of patient recruitment for clinical studies. 54 We have adopted a code of conduct, employee handbook, and compliance policies, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these 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 be in compliance with such laws or regulations.

Any similar adverse changes in the patent laws of other jurisdictions could also harm our business, financial condition, results of operations and prospects. 64 We may be subject to claims, including third-party claims of intellectual property infringement, misappropriation or other violations against us or our collaborators, challenging the ownership or inventorship of our intellectual property and, if unsuccessful in any of these proceedings, we may be required to obtain licenses from third parties, which may not be available on commercially reasonable terms, or at all, or to cease the development, manufacture and commercialization of one or more of our products.

Any similar adverse changes in the patent laws of other jurisdictions could also harm our business, financial condition, results of operations and prospects. 65 We may be subject to claims, including third-party claims of intellectual property infringement, misappropriation or other violations against us or our collaborators, challenging the ownership or inventorship of our intellectual property and, if unsuccessful in any of these proceedings, we may be required to obtain licenses from third parties, which may not be available on commercially reasonable terms, or at all, or to cease the development, manufacture and commercialization of one or more of our products.

These and other claims that we have misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business, including with respect to the infringement claims discussed above. 60 Even if we are successful in defending against intellectual property claims, litigation or other legal proceedings relating to such claims, the claims and related defense may still cause us to incur significant expenses, cause reputational harm, and could distract our technical and management personnel from their normal responsibilities.

These and other claims that we have misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business, including with respect to the infringement claims discussed above. 61 Even if we are successful in defending against intellectual property claims, litigation or other legal proceedings relating to such claims, the claims and related defense may still cause us to incur significant expenses, cause reputational harm, and could distract our technical and management personnel from their normal responsibilities.

In addition, if we experience a significant increase in demand, additional computing and storage capacity and resources, and additional technical support personnel required to support the increased demand may not be available when required or on terms that are acceptable to us, or at all, which may negatively affect our sales, business, financial condition, and results of operations. 42 Risks related to government regulation and our industry Our operations and technology are subject to pervasive and continuing FDA regulatory requirements, and failure to comply with these requirements could harm our business, financial condition and results of operations.

In addition, if we experience a significant increase in demand, additional computing and storage capacity and resources, and additional technical support personnel required to support the increased demand may not be available when required or on terms that are acceptable to us, or at all, which may negatively affect our sales, business, financial condition, and results of operations. 43 Risks related to government regulation and our industry Our operations and technology are subject to pervasive and continuing FDA regulatory requirements, and failure to comply with these requirements could harm our business, financial condition and results of operations.

These larger customers, due to their enhanced purchasing power, may attempt to increase the pressure on product pricing. 26 Significant healthcare reforms have had an impact on medical device manufacturer and hospital revenues.

These larger customers, due to their enhanced purchasing power, may attempt to increase the pressure on product pricing. Significant healthcare reforms have had an impact on medical device manufacturer and hospital revenues.

Any of the foregoing could harm our business, financial condition and results of operations. 68 If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed.

Any of the foregoing could harm our business, financial condition and results of operations. If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed.

If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation in effect upon the effectiveness of our IPO to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could harm our business and financial condition. 78 Item 1B Unresolved Staff Comments None.

We may not have adequate remedies for any such breaches, and such claims could harm our business, financial condition and results of operations. 66 To counter or defend against such claims can be expensive and time-consuming and it may be necessary or we may desire to enter into a license to settle any such claims; however, there can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all.

We may not have adequate remedies for any such breaches, and such claims could harm our business, financial condition and results of operations. 67 To counter or defend against such claims can be expensive and time-consuming, and it may be necessary, or we may desire to, enter into a license to settle any such claims; however, there can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all.

We plan to collaborate with other MRI scanner vendors to establish compatibility of their respective scanners and MRS capabilities for use with our products, to include discounted pricing on spectroscopy software for MRI sites interested in providing DLBP patients with the NOCISCAN offering. 15 Plan of Operation and Growth Strategies Our primary near-term growth strategy is to secure payer contracts to cover our Category III CPT codes.

We plan to collaborate with other MRI scanner vendors to establish compatibility of their respective scanners and MRS capabilities for use with our products, to include discounted pricing on spectroscopy software for MRI sites interested in providing DLBP patients with the NOCISCAN offering. 16 Plan of Operation and Growth Strategies Our primary near-term growth strategy is to secure payer contracts to cover our Category III CPT codes.

If there is a change in our ability to market our products it may harm our sales, business, financial condition and results of operations; 33 · Our commercial success will depend on attaining significant market acceptance of our technology among patients, clinicians (primarily spine surgeons and pain management physicians) and imaging facilities, as well as increasing the number of patients who are prescribed for use of our diagnostic technology.

If there is a change in our ability to market our products it may harm our sales, business, financial condition and results of operations; 34 · Our commercial success will depend on attaining significant market acceptance of our technology among patients, clinicians (primarily spine surgeons and pain management physicians) and imaging facilities, as well as increasing the number of patients who are prescribed for use of our diagnostic technology.

In spite of our best efforts, our licensors might conclude that we have materially breached such license agreements and might therefore terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technologies covered by these license agreements. 61 We have an existing license with the Regents of the University of California which covers multiple patents and patent applications for inventions that are incorporated into our products.

In spite of our best efforts, our licensors might conclude that we have materially breached such license agreements and might therefore terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technologies covered by these license agreements. 62 We have an existing license with the Regents of the University of California which covers multiple patents and patent applications for inventions that are incorporated into our products.

Further, there can be no assurance that there will be any joint marketing or that future financial arrangements between us and SIEMENs will be established, and even if established, that such agreements will be successful or profitable. 17 RadNet Two of the Company’s imaging centers that are fully operational to perform NOCISCAN’s are owned by RadNet, Inc., (“RadNet”) a leading provider of outpatient imaging centers in the United States.

Further, there can be no assurance that there will be any joint marketing or that future financial arrangements between us and SIEMENs will be established, and even if established, that such agreements will be successful or profitable. 18 RadNet Two of the Company’s imaging centers that are fully operational to perform NOCISCAN’s are owned by RadNet, Inc., (“RadNet”) a leading provider of outpatient imaging centers in the United States.

In particular, government agencies have increased regulatory scrutiny and enforcement activity with respect to manufacturer reimbursement support activities and patient care programs, including bringing criminal charges or civil enforcement actions under the Anti-Kickback Statute, the FCA and HIPAA’s healthcare fraud and privacy provisions. 46 Achieving and sustaining compliance with applicable federal and state anti-fraud and abuse laws may prove costly.

In particular, government agencies have increased regulatory scrutiny and enforcement activity with respect to manufacturer reimbursement support activities and patient care programs, including bringing criminal charges or civil enforcement actions under the Anti-Kickback Statute, the FCA and HIPAA’s healthcare fraud and privacy provisions. 47 Achieving and sustaining compliance with applicable federal and state anti-fraud and abuse laws may prove costly.

Any of the foregoing could harm our sales, business, financial condition and results of operations. 58 We rely on a License from the Regents of the University of California, as well as other aspects of our own patented technology and intellectual property, in order to be able to use and sell various proprietary technologies that are material to our business, as well as technologies which we intend to use in our future commercial activities.

Any of the foregoing could harm our sales, business, financial condition and results of operations. 59 We rely on a License from the Regents of the University of California, as well as other aspects of our own patented technology and intellectual property, in order to be able to use and sell various proprietary technologies that are material to our business, as well as technologies which we intend to use in our future commercial activities.

If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition and results of operations may be harmed. 63 Changes in U.S. patent laws, or patent laws in other countries and jurisdictions, could diminish the value of patents in general, thereby impairing our ability to protect our products.

If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition and results of operations may be harmed. 64 Changes in U.S. patent laws, or patent laws in other countries and jurisdictions, could diminish the value of patents in general, thereby impairing our ability to protect our products.

In addition, we may be the subject of litigation or adverse publicity, which could negatively affect our business, financial condition and results of operations. 52 We expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact such future laws, rules, regulations and standards may have on our business.

In addition, we may be the subject of litigation or adverse publicity, which could negatively affect our business, financial condition and results of operations. 53 We expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact such future laws, rules, regulations and standards may have on our business.

Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names or other intellectual property may be ineffective, could result in substantial costs, diversion of resources, or adverse impact to our brand and could harm our sales, business, financial condition, and results of operations. 67 Intellectual property rights do not necessarily address all potential threats, and limitations in intellectual property rights could harm our business, financial condition and results of operations.

Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names or other intellectual property may be ineffective, could result in substantial costs, diversion of resources, or adverse impact to our brand and could harm our sales, business, financial condition, and results of operations. 68 Intellectual property rights do not necessarily address all potential threats, and limitations in intellectual property rights could harm our business, financial condition and results of operations.

As such, we self-certified our product for the CE mark under a Declaration of Conformity (“DOC”) filed by us as part of a dossier with a qualified EU Representative. Since self-certification was completed by the Company, the EU adopted Medical Device Regulation (EU) 2019/1020, known as MDR, that went into effect on July 16, 2021.

As such, we self-certified our product for the CE mark under a Declaration of Continuity (“DOC”) filed by us as part of a dossier with a qualified EU Representative. Since self-certification was completed by the Company, the EU adopted Medical Device Regulation (EU) 2019/1020, known as MDR, that went into effect on July 16, 2021.

This would result in us losing exclusive proprietary advantage with respect to technologies and methods relating to those patents, which could harm our sales, business, financial condition, and results of operations. 62 If we are unable to obtain patent term extension under the Hatch-Waxman Amendments, our business may be materially harmed.

This would result in us losing exclusive proprietary advantage with respect to technologies and methods relating to those patents, which could harm our sales, business, financial condition, and results of operations. 63 If we are unable to obtain patent term extension under the Hatch-Waxman Amendments, our business may be materially harmed.

Any of these outcomes could impair our ability to prevent competition from third parties, which may harm our business. 57 The strength of patent rights generally, and particularly the patent position of medical device companies, involves complex legal and scientific questions, can be uncertain, and has been the subject of much litigation in recent years.

Any of these outcomes could impair our ability to prevent competition from third parties, which may harm our business. 58 The strength of patent rights generally, and particularly the patent position of medical device companies, involves complex legal and scientific questions, can be uncertain, and has been the subject of much litigation in recent years.

Failure to comply with the applicable United States medical device regulatory requirements could result in, among other things, warning letters, untitled letters, fines, injunctions, consent decrees, civil penalties, unanticipated expenditures, repairs, replacements, refunds, recalls or seizures of products, operating restrictions, total or partial suspension of production, the FDA’s refusal to issue certificates to foreign governments needed to export products for sale in other countries, the FDA’s refusal to grant future premarket clearances or approvals, withdrawals or suspensions of current product clearances or approvals and criminal prosecution.

Such proceedings also may result in substantial cost and require significant time from our management, even if the eventual outcome is favorable to us. 59 In addition, if we initiate legal proceedings against a third party to enforce a patent relating to our products, the defendant could counterclaim that such patent is invalid or unenforceable.

Such proceedings also may result in substantial cost and require significant time from our management, even if the eventual outcome is favorable to us. 60 In addition, if we initiate legal proceedings against a third party to enforce a patent relating to our products, the defendant could counterclaim that such patent is invalid or unenforceable.

Third parties may in the future claim that our products infringe or violate their patents or other intellectual property rights. 65 Defense of infringement claims, regardless of their merit or outcome, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business, and may impact our reputation.

Third parties may in the future claim that our products infringe or violate their patents or other intellectual property rights. 66 Defense of infringement claims, regardless of their merit or outcome, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business, and may impact our reputation.

The SEC maintains a public website, www.sec.gov, which includes information about and the filings of issuers that file electronically with the SEC. 32 Item 1A Risk Factors Summary of Risk Factors The following is a summary of the principal risks and uncertainties that could materially adversely affect our business, financial condition, or results of operations.

The SEC maintains a public website, www.sec.gov, which includes information about and the filings of issuers that file electronically with the SEC. 33 Item 1A Risk Factors Summary of Risk Factors The following is a summary of the principal risks and uncertainties that could materially adversely affect our business, financial condition, or results of operations.

If we are not able to efficiently automate these processes, the Company will not be able to grow and our sales, business, financial condition and results of operations will be harmed. 34 Risk Factors. This Annual Report on Form 10-K contains forward-looking information based on our current expectations.

If we are not able to efficiently automate these processes, the Company will not be able to grow and our sales, business, financial condition and results of operations will be harmed. 35 Risk Factors. This Annual Report on Form 10-K contains forward-looking information based on our current expectations.

We may face delays in, or be prevented from, completing our clinical studies if these parties do not perform their obligations in a timely, compliant or competent manner. Such roles, functions, and related risks, also apply to certain employees of the Company.

We may face delays in, or be prevented from, completing our clinical studies if these parties do not fulfill their obligations in a timely, compliant or competent manner. Such roles, functions, and related risks, also apply to certain employees of the Company.

Our quarterly and annual operating results may fluctuate due to a variety of factors, many of which are outside of our control, including, but not limited to: · The level of demand for our technology and any future technology, which may vary significantly from period to period; · Expenditures that we may incur to acquire, develop or commercialize additional technology; · The timing and cost of obtaining regulatory approvals or clearances to expand our indications and get future approvals of any future technology or features; · Pricing pressures; · Our ability to expand the geographic reach of our commercial efforts; · The degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners; · Coverage and reimbursement policies with respect to our technology, and potential future technology that compete with our products; · The timing and success or failure of preclinical or clinical studies for expanding the indications of our technology or any future technology we develop or competing technology; · Positive or negative coverage in the media or clinical publications of our technology or technology of our competitors or our industry; · The impact of COVID-19 on procedure volume or otherwise; · The timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to our technology, which may change from time to time; · The cost of developing our technology, which may vary depending on the terms of our agreements with third-party; and · Future accounting pronouncements or changes in our accounting policies.

Our quarterly and annual operating results may fluctuate due to a variety of factors, many of which are outside of our control, including, but not limited to: · The level of demand for our technology and any future technology, which may vary significantly from period to period; · Expenditures that we may incur to acquire, develop or commercialize additional technology; · The timing and cost of obtaining regulatory approvals or clearances to expand our indications and get future approvals of any future technology or features; · Pricing pressures; · Our ability to expand the geographic reach of our commercial efforts; · The degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners; · Coverage and reimbursement policies with respect to our technology, and potential future technology that compete with our products; · The timing and success or failure of preclinical or clinical studies for expanding the indications of our technology or any future technology we develop or competing technology; · Positive or negative coverage in the media or clinical publications of our technology or technology of our competitors or our industry; · The timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to our technology, which may change from time to time; · The cost of developing our technology, which may vary depending on the terms of our agreements with third-party; and · Future accounting pronouncements or changes in our accounting policies.

There are no material proceedings in which any of our directors, officers or affiliates or any registered or beneficial stockholder of more than 5% of our common stock is an adverse party or has a material interest adverse to our interest. Item 4 Mine Safety Disclosures None. 79 PART II

Government Regulation United States FDA. In the United States, the FDA has broad regulatory powers with respect to pre-clinical and clinical testing of new medical devices and the designing, manufacturing, labeling, storage, record keeping, marketing, advertising, promotion, distribution, post-approval monitoring and reporting and import and export of medical devices.

In the United States, the FDA has broad regulatory powers with respect to pre-clinical and clinical testing of new medical devices and the designing, manufacturing, labeling, storage, record keeping, marketing, advertising, promotion, distribution, post-approval monitoring and reporting and import and export of medical devices.

Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase shares of our common stock. We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business.

Because we do not expect to pay dividends in the foreseeable future, investors seeking cash dividends should not purchase shares of our common stock. We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business.

These results could limit adoption of our technology, which would harm our sales, business, financial condition, and results of operations. 41 We expect to increase the size of our organization in the future, and we may experience difficulties in managing this growth.

These results could limit adoption of our technology, which would harm our sales, business, financial condition, and results of operations. 42 We expect to increase the size of our organization in the future, and we may experience difficulties in managing this growth.

The market price for our common stock may be influenced by many factors, including: · the success of competitive products or technologies; · regulatory or legal developments in the United States, · the recruitment or departure of key personnel; · the level of expenses related to any of our product candidates, and our commercialization efforts; · actual or anticipated changes in our development timelines; · our ability to raise additional capital; · disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our product candidates; · significant lawsuits, including patent or stockholder litigation; · variations in our financial results or those of companies that are perceived to be similar to us; · general economic, industry and market conditions; and · the other factors described in this “Risk Factors” section. 75 If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.

The market price for our common stock may be influenced by many factors, including: · the success of competitive products or technologies; · regulatory or legal developments in the United States, · the recruitment or departure of key personnel; · the level of expenses related to any of our product candidates, and our commercialization efforts; · actual or anticipated changes in our development timelines; · our ability to raise additional capital; · disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our product candidates; · significant lawsuits, including patent or stockholder litigation; · variations in our financial results or those of companies that are perceived to be similar to us; · general economic, industry and market conditions; and · the other factors described in this “ Risk Factors ” section. 76 If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.

The laws that may affect our ability to operate include, among others: · The Anti-Kickback Statute, which prohibits, among other things, knowingly and willingly soliciting, offering, receiving or paying remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual, or the purchase, order or recommendation of, items or services for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs; · The federal civil and criminal false claims laws, including the FCA, and civil monetary penalties laws, which prohibits, among other things, persons or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds and knowingly making, using or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease or conceal an obligation to pay money to the federal government; · The Health Insurance Portability and Accountability Act of 1996, or HIPAA, which applies to our customers and some of their downstream vendors and contractors, imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payers, or knowingly and willfully falsifying, concealing or covering up a material fact or making a materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services; · Various state laws governing the privacy and security of personal information, including the California Consumer Privacy Act (“CCPA"), which became effective on January 1, 2020, which regulates the processing of personal information of California residents and increases the privacy and security obligations of covered companies handling such personal information.

There are also similar laws in other countries that we may become subject to if we expand internationally. 46 The laws that may affect our ability to operate include, among others: · The Anti-Kickback Statute, which prohibits, among other things, knowingly and willingly soliciting, offering, receiving or paying remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual, or the purchase, order or recommendation of, items or services for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs; · The federal civil and criminal false claims laws, including the FCA, and civil monetary penalties laws, which prohibits, among other things, persons or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds and knowingly making, using or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease or conceal an obligation to pay money to the federal government; · The Health Insurance Portability and Accountability Act of 1996, or HIPAA, which applies to our customers and some of their downstream vendors and contractors, imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payers, or knowingly and willfully falsifying, concealing or covering up a material fact or making a materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services; · Various state laws governing the privacy and security of personal information, including the California Consumer Privacy Act (“CCPA"), which became effective on January 1, 2020, which regulates the processing of personal information of California residents and increases the privacy and security obligations of covered companies handling such personal information.

Utilizing the results of our European Spine Journal Study, we applied to the American Medical Association for CPT codes to begin the process of securing insurance coverage to pay for NOCISCAN. On January 1, 2021, Category III CPT codes became effective. The Company is now executing its plan to commercialize NOCISCAN.

However, we plan to use the proceeds of our IPO to hire the personnel and expend our financial resources do so. The Category III Codes become more valuable and useful upon being converted into Level I, when widespread reimbursement coverage is expected to be achievable.

However, we plan to use the proceeds of our public offering to hire the personnel and expend our financial resources do so. The Category III Codes become more valuable and useful upon being converted into Level I, when widespread reimbursement coverage is expected to be achievable.

The market price of our common stock and IPO Warrants may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including: · Actual or anticipated fluctuations in our financial condition and results of operations; · Variance in our financial performance from expectations of securities analysts or investors; · Changes in the coverage decisions, reimbursement or pricing of our technology; · Changes in our projected operating and financial results; · Changes in laws or regulations applicable to our technology; · Announcements by us or our competitors of significant business developments, acquisitions, or new offerings; · Publicity associated with issues related to our technology; · Our involvement in regulatory investigations or litigation; · Future sales of our common stock or other securities, by us or our stockholders, as well as the anticipation of lock-up releases; · Changes in senior management or key personnel; · The trading volume of our common stock; · Changes in the anticipated future size and growth rate of our market; · General economic, regulatory, and market conditions, including economic recessions or slowdowns; · The impact of the COVID-19 pandemic; · Changes in the structure of healthcare payment systems; and · Developments or disputes concerning our intellectual property or other proprietary rights. 72 Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may negatively impact the market price of our common stock.

The market price of our common stock and IPO Warrants may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including: · Actual or anticipated fluctuations in our financial condition and results of operations; · Variance in our financial performance from expectations of securities analysts or investors; · Changes in the coverage decisions, reimbursement or pricing of our technology; · Changes in our projected operating and financial results; · Changes in laws or regulations applicable to our technology; · Announcements by us or our competitors of significant business developments, acquisitions, or new offerings; · Publicity associated with issues related to our technology; · Our involvement in regulatory investigations or litigation; · Future sales of our common stock or other securities, by us or our stockholders, as well as the anticipation of lock-up releases; · Changes in senior management or key personnel; · The trading volume of our common stock; · Changes in the anticipated future size and growth rate of our market; · General economic, regulatory, and market conditions, including economic recessions or slowdowns; · Changes in the structure of healthcare payment systems; and · Developments or disputes concerning our intellectual property or other proprietary rights.

The stock market in general and the market for bio-technology companies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above your investment price.

Our common stock price is likely to be volatile. The stock market in general and the market for bio-technology companies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above your investment price.

The majority of revenue will be derived from or based on sales of software products that may not be commercially available for many years, if at all. 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.

If we are unable to engage or receive CE mark approval from a Notified Body under the MDR by the May 2024 grace period deadline, or are determined to be non-compliant with MDR regulations not subject to the grace period and therefore applicable to us as of May 2021, we could lose our CE mark, and may become unable to continue promoting or selling our products for commercial use in the EU, UK, or other countries that relate their medical device regulations to a CE mark. 44 In conjunction with Brexit, medical devices in the UK are no longer governed by CE regulations.

The Company entered into a subleasing agreement in 2021 and realized $26,340 and $48,400 of sublease income for the year ended December 31, 2022, and 2021. Both the lease and sublease are netted within the general & administrative line item in the Statements of Operations.

The Company entered into a subleasing agreement in 2021 and realized $0 and $26,340 of sublease income for the year ended December 31, 2023, and 2022. Both the lease and sublease are netted within the general & administrative line item in the Statements of Operations.

While we intend to expand the population of patients we can provide with our diagnostic technology as well as increase the number of physicians, surgeons and clinicians that can prescribe technology, there can be no assurance that we will succeed. 38 The commercial success of our technology will continue to depend on a number of factors, including the following: · the actual and perceived effectiveness, safety and reliability, and clinical benefit, of our technology, especially relative to alternative diagnostic systems and devices; · the prevalence and severity of any adverse patient events involving the use of our technology; · the degree to which physicians, surgeons and clinicians, patients and imaging centers adopt our technology; · the continued effects of the COVID-19 pandemic; · the availability, relative cost and perceived advantages and disadvantages of alternative technologies, or other diagnostic or treatment methods, for spine and back pain; · the results of additional clinical and other studies relating to the health, safety, economic or other benefits of our technology; · whether key thought leaders in the medical community accept that our clinical efficacy and safety results are sufficiently meaningful to influence their decision to adopt our technology over other spine and back pain diagnostics; · the extent to which we are successful in educating physicians, surgeons, clinicians, patients, and imaging facilities about the appropriate (and inappropriate) uses and benefits of our technology; · the strength of our marketing and distribution infrastructure, including our ability to drive adoption and utilization of our technology, as well as our ability to develop and maintain relationships with MRI manufacturers and imaging centers; · our ability to obtain, maintain, protect, enforce and defend our intellectual property rights, in and to our technology; · our ability to maintain compliance with all legal and regulatory requirements, including those applicable to our technology; · our ability to maintain our contractual relationships with our vendors and component suppliers, including single-source vendors and suppliers through which we obtain critical components for (or compatible use with) our technology; · the establishment and continued reimbursement coverage of and adequate payment for the use of our technology and · our ability to continue to attract and retain key personnel.

The commercial success of our technology will continue to depend on a number of factors, including the following: · the actual and perceived effectiveness, safety and reliability, and clinical benefit, of our technology, especially relative to alternative diagnostic systems and devices; · the prevalence and severity of any adverse patient events involving the use of our technology; · the degree to which physicians, surgeons and clinicians, patients and imaging centers adopt our technology; · the availability, relative cost and perceived advantages and disadvantages of alternative technologies, or other diagnostic or treatment methods, for spine and back pain; · the results of additional clinical and other studies relating to the health, safety, economic or other benefits of our technology; · whether key thought leaders in the medical community accept that our clinical efficacy and safety results are sufficiently meaningful to influence their decision to adopt our technology over other spine and back pain diagnostics; · the extent to which we are successful in educating physicians, surgeons, clinicians, patients, and imaging facilities about the appropriate (and inappropriate) uses and benefits of our technology; · the strength of our marketing and distribution infrastructure, including our ability to drive adoption and utilization of our technology, as well as our ability to develop and maintain relationships with MRI manufacturers and imaging centers; · our ability to obtain, maintain, protect, enforce and defend our intellectual property rights, in and to our technology; · our ability to maintain compliance with all legal and regulatory requirements, including those applicable to our technology; · our ability to maintain our contractual relationships with our vendors and component suppliers, including single-source vendors and suppliers through which we obtain critical components for (or compatible use with) our technology; · the establishment and continued reimbursement coverage of and adequate payment for the use of our technology and · our ability to continue to attract and retain key personnel.

See “Reimbursement” below. 7 The core technology underlying NOCISCAN is the use of MR spectroscopy to identify the chemical makeup of intervertebral discs with a focus on identifying specific proprietary biomarkers known to be correlated to pain and to the structural degradation of discs.

The core technology underlying NOCISCAN is the use of MR spectroscopy to identify the chemical makeup of intervertebral discs with a focus on identifying specific proprietary biomarkers known to be correlated to pain and to the structural degradation of discs.

These provisions include: · inclusion of only two years, as compared to three years, of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” disclosure; · an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”); · an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring mandatory audit firm rotation; · reduced disclosure about executive compensation arrangements; and · an exemption from the requirement to seek non-binding advisory votes on executive compensation or golden parachute arrangements. 31 We may take advantage of these provisions until we are no longer an emerging growth company.

By tracking specific treatments applied to each patient over time and correlating the effectiveness of those treatments to the MRS data of each disc, we expect to create a large repository of clinical data that can be used to train advanced machine learning algorithms that correlate MRS signatures from specific discs to improved outcomes from conservative and regenerative therapies.

Engaging in litigation, including to defend against third-party infringement claims is very expensive, particularly for a company of our size, and time-consuming.

Engaging in litigation, including defending against third-party infringement claims is very expensive, particularly for a company of our size, and time-consuming.

The commencement and completion of clinical studies to support label retention and expansion for additional indications or for new products may be delayed, suspended or terminated as a result of many factors, including: · the delay or refusal of regulators or Institutional Review Boards, or IRBs, to authorize us to commence a clinical study at a prospective trial site; · changes in regulatory requirements, policies and guidelines; · delays or failure to reach agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; · delays in patient enrollment and variability in the number and types of patients available for clinical studies, including due to COVID-19 or other disease outbreak, and delays in or the inability to monitor enrolled patients, including due to COVID-19 or other disease outbreak; · the inability to recruit, enroll, or retain a sufficient number of patients; · deviations by our CROs or clinical sites from the trial protocol or study discontinuation by participants, investigators, or study sites; · safety or tolerability concerns that could cause us to suspend or terminate a trial if we find that the participants are being exposed to unacceptable health risks; · regulators, Institutional Review Boards (“IRBs”), Ethics Committees or Data Safety Monitoring Boards requiring that we or our investigators or study sites suspend or terminate clinical studies for various reasons, including noncompliance with GCP or other regulatory requirements or safety concerns; · lower than anticipated retention rates of patients and volunteers in clinical studies; · failure of our CROs or clinical studies sites to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; · delays relating to identifying and engaging with and adding new clinical study site that have access to compatible MR scanners for using our products; and · exceeding budgeted costs. 48 In addition, if the FDA concludes that we have not adequately disclosed financial interests of our investigators or if our disclosed financial relationships with investigators result in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at the applicable clinical study site or the utility of the clinical study itself, FDA may refuse to consider data from the study.

The commencement and completion of clinical studies to support label retention and expansion for additional indications or for new products may be delayed, suspended or terminated as a result of many factors, including: · the delay or refusal of regulators or Institutional Review Boards, or IRBs, to authorize us to commence a clinical study at a prospective trial site; · changes in regulatory requirements, policies and guidelines; · delays or failure to reach agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; · delays in patient enrollment and variability in the number and types of patients available for clinical studies, including due to COVID-19 or other disease outbreak, and delays in or the inability to monitor enrolled patients, including due to COVID-19 or other disease outbreak; · the inability to recruit, enroll, or retain a sufficient number of patients; · deviations by our CROs or clinical sites from the trial protocol or study discontinuation by participants, investigators, or study sites; · safety or tolerability concerns that could cause us to suspend or terminate a trial if we find that the participants are being exposed to unacceptable health risks; · regulators, Institutional Review Boards (“IRBs”), Ethics Committees or Data Safety Monitoring Boards requiring that we or our investigators or study sites suspend or terminate clinical studies for various reasons, including noncompliance with GCP or other regulatory requirements or safety concerns; 49 · lower than anticipated retention rates of patients and volunteers in clinical studies; · failure of our CROs or clinical studies sites to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; · delays relating to identifying and engaging with and adding new clinical study site that have access to compatible MR scanners for using our products; and · exceeding budgeted costs.

Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or other governmental regulatory agencies, which enforcement actions may include the following: · untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; · unanticipated expenditures to address or defend such actions; · issuance of form 483s, or other compliance or enforcement notices, communications or correspondence from regulatory bodies; · recall, detention or seizure of our products; · operating restrictions or partial suspension or total shutdown of marketing, sales and production or offering of product-related services; · refusing or delaying our requests for 510(k) clearance or de novo classification or PMA approval of new products or modified products; · requiring products that we determined to be classified and listed with the FDA as a Class I, 510(k)-exempt medical device, or that we determined not to be a medical device and thus unregulated by the FDA, instead to be submitted for marketing authorization (510(k) clearance, de novo classification, or PMA approval); · operating restrictions; · withdrawing market authorizations that have already been granted; · refusal to grant any export approval that might be required for our NOCISCAN product suite; or · criminal prosecution If any of these events were to occur, it would have a negative impact on our business, financial condition and results of operations. 49 If certain of our medical device products cause or contribute to a death or a serious injury or malfunction in certain ways, we will be required to report under applicable medical device reporting regulations, or MDRs, which can result in voluntary corrective actions or agency enforcement actions and harm our reputation, business, financial condition and results of operations.

Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or other governmental regulatory agencies, which enforcement actions may include the following: · untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; · unanticipated expenditures to address or defend such actions; · issuance of form 483s, or other compliance or enforcement notices, communications, or correspondence from regulatory bodies; · recall, detention or seizure of our products; · operating restrictions or partial suspension or total shutdown of marketing, sales and production or offering of product-related services; · refusing or delaying our requests for 510(k) clearance or de novo classification or PMA approval of new products or modified products; · requiring products that we determined to be classified and listed with the FDA as a Class I, 510(k)-exempt medical device, or that we determined not to be a medical device and thus unregulated by the FDA, instead to be submitted for marketing authorization (510(k) clearance, de novo classification, or PMA approval); · operating restrictions; 50 · withdrawing market authorizations that have already been granted; · refusal to grant any export approval that might be required for our NOCISCAN product suite; or · criminal prosecution If any of these events were to occur, it would have a negative impact on our business, financial condition and results of operations.

Employees As of January 1, 2023, we had 7 total employees, 2 of whom were engaged in full-time research and development activities, 1 engaged in strategy and business development, and 4 of whom were engaged in general administration. We believe that we maintain good relations with our employees.

Employees As of January 1, 2024, we had 6 total employees, 2 of whom were engaged in full-time research and development activities, 1 engaged in strategy and business development, and 3 of whom were engaged in general administration. We believe that we maintain good relations with our employees.

The Company intends to publish the various factors (i.e. weighting and thresholds) applied to adjusting and analyzing the various input chemical ratios, and the correlative analysis to the PD reference test (as well as certain related treatment outcomes), in medical literature in marketing NOCIGRAM. The user is informed of the medical literature in the instructions for use of NOCIGRAM.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. You may experience additional dilution if our IPO Warrants are exercised.

These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. You may experience additional dilution if any of our outstanding common stock warrants are exercised.

Securities and Exchange Commission, or SEC, or other regulatory authorities, which would require additional financial and management resources. 36 If we continue to have material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, we may be late with the filing of our periodic reports, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected.

If we continue to have material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, we may be late with the filing of our periodic reports, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected.

We believe NOCISCAN advantages include: (a) enhancing the ability and value of otherwise standard lumbar MRI exams to, for the first time, reliably identify chemically painful discs causing DLBP; and (b) providing a “Virtual Discogram™” as an entirely non-invasive, objectively quantitative, pain-free, non-significant risk, and more widely adoptable alternative to needle-based PD exams (which share none of those advantages). 12 More specifically, NOCISCAN offers many specific advantages to the marketplace, from a diagnostic point of view, including: 1) Readily and widely adoptable; 2) Non-invasive; 3) Non-painful; 4) Nonsignificant risk to patients; 5) Objective, quantitative diagnostic information; 6) Enhances the diagnostic value of MR exams for painful disc diagnosis in DLBP patients; 7) Correlative to the modern standard and accurate technique of PD diagnostic exams for DLBP diagnosis - but without the invasive, painful, subjective, potentially harmful, and limited adoptability shortcomings of PD; 8) First and only known ability to non-invasively assess degenerative painful disc chemistry; 9) More informed ability to reliably diagnose painful vs. non-painful discs; 10) More informed ability to predict the potential for ASD to develop or advance in discs next to neighboring discs that are initial surgical targets; 11) More informed ability to reliably diagnose actual ASD in discs following a prior surgery in neighboring discs; 12) Potential for improved patient outcomes in DLBP patients resulting from more informed diagnostic acuity for painful vs. non-painful discs and related targeted treatment planning; and 13) The only known non-invasive disc chemistry measurement and monitoring tool to support clinical research, development, and evaluation of new therapies, e.g. injectable biologics/cell therapies, that have therapeutic mechanisms of action related to disc chemistry interactions and changes.

More specifically, NOCISCAN offers many specific advantages to the marketplace, from a diagnostic point of view, including: 1) Readily and widely adoptable; 2) Non-invasive; 3) Non-painful; 4) Nonsignificant risk to patients; 5) Objective, quantitative diagnostic information; 6) Enhances the diagnostic value of MR exams for painful disc diagnosis in DLBP patients; 7) Correlative to the modern standard and accurate technique of PD diagnostic exams for DLBP diagnosis - but without the invasive, painful, subjective, potentially harmful, and limited adoptability shortcomings of PD; 13 8) First and only known ability to non-invasively assess degenerative painful disc chemistry; 9) More informed ability to reliably diagnose painful vs. non-painful discs; 10) More informed ability to predict the potential for ASD to develop or advance in discs next to neighboring discs that are initial surgical targets; 11) More informed ability to reliably diagnose actual ASD in discs following a prior surgery in neighboring discs; 12) Potential for improved patient outcomes in DLBP patients resulting from more informed diagnostic acuity for painful vs. non-painful discs and related targeted treatment planning; and 13) The only known non-invasive disc chemistry measurement and monitoring tool to support clinical research, development, and evaluation of new therapies, e.g. injectable biologics/cell therapies, that have therapeutic mechanisms of action related to disc chemistry interactions and changes.

If these third parties or employees do not successfully carry out their duties, comply with Good Clinical Practice (GCP) guidelines and other applicable requirements, or meet expected deadlines, or if the quality, completeness or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical study protocols or for other reasons, our clinical studies or trials may need to be extended, delayed or terminated by us or be placed on clinical hold by FDA, or may otherwise prove to be unsuccessful, and we may have to conduct additional studies, which would significantly increase our costs.

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. Available Information Our internet address is www.aclarion.com.

If we are unable to manage the anticipated growth of our business, our future revenue and operating results may be harmed. As of February 1, 2023, we had 7 full-time employees, 1 full-time consultant, and 6 part-time consultants.

If we are unable to manage the anticipated growth of our business, our future revenue and operating results may be harmed. As of December 31, 2023, we had 4 full-time employees, 2 part-time employees,1 full-time consultant, and 3 part-time consultants.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+8 added−16 removed3 unchanged

2022 filing

2023 filing

As of February 24, 2023, there were approximately 153 holders of record of our common stock and 1 holder of record of our IPO Warrants. These numbers are based on the actual number of holders registered at such date and does not include holders whose shares are held in “street name” by brokers and other nominees.

As of December 31, 2023, there were approximately 137 holders of record of our common stock and 1 holder of record of our IPO Warrants. These numbers are based on the actual number of holders registered at such date and does not include holders whose shares are held in “street name” by brokers and other nominees.

Removed

Recent Sales of Unregistered Securities In connection with our IPO, on April 21, 2022 the Company effected a 1-for-7.47 reverse stock split (the “Reverse Stock Split”) of its issued and outstanding common stock. All per share amounts and numbers of shares of common stock below reflect the Reverse Stock Split.

Added

Recent Sales of Unregistered Securities During the year ended December 31, 2023, all sales of unregistered securities by the Company have been previously reported on a Form 8-K or Form 10-Q.

Removed

From January 1, 2019 through December 31, 2022, we sold and issued the following unregistered securities: · During 2018 and early 2019, the Company conducted a financing consisting of Preferred B-1 shares, which accrued 6% interest.

Added

Issuer Purchases of Equity Securities On February 16, 2023, we entered into a securities purchase agreement with Jeffrey Thramann, our Executive Chairman pursuant to which we issued and sold one (1) share of the Company’s newly designated Series A Preferred Stock for an aggregate purchase price of $1,000.

Removed

A total of $5,217,698 was raised in 2018 and $2,463,328 was raised in 2019. · In February 2020, the Company issued to Nuvasive, Inc. a $2 million “SAFE” (Simple Agreement for Future Equity).

Added

The share of Series A Preferred Stock had 15,000,000 votes and voted together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to the proposal to amend the Company’s Certificate of Incorporation to effect a reverse stock split of the Company’s common stock.

Removed

In December 2021, the SAFE was converted into shares of Series B-2 Preferred Stock. · In February 2020 and continuing through June 2021, the Company conducted a financing in the form of 6% convertible promissory notes due June 30, 2021. This financing raised $2,114,041 during 2020 and $814,000 during the first six months of 2021.

Added

The share of Series A Preferred Stock was voted, without action by the holder, on the reverse stock split proposal in the same proportion as shares of common stock were voted on such proposal (excluding any common shares that are not voted).

Removed

In December 2021, all such notes were converted into shares of Series B-3 Preferred Stock. · In connection with the above-referenced note financing, the Company also issued certain common stock warrants.

Added

The Series A Preferred Stock otherwise had no voting rights, except as otherwise required by the General Corporation Law of the State of Delaware. The share of Series A Preferred Stock was not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company.

Removed

Such warrants were net exercised immediately prior to our IPO, resulting in the issuance of 60,408 shares of common stock. · In February 2021 and April 2020, the Company entered into two promissory notes (the “PPP Notes”) evidencing an unsecured loan (the “Loan”) in the amounts of $125,000 and $245,191 made to the Company under the Paycheck Protection Program (the “PPP”).

Added

The share of Series A Preferred Stock had no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Share of Series A Preferred Stock was not entitled to receive dividends of any kind.

Removed

The PPP was established under the CARES Act and is administered by the U.S. Small Business Administration. · In June 2021, the Company issued $2.0 million of secured promissory notes that would mature at the earlier of the consummation of a qualified financing or May 31, 2022.

Added

The share of Series A Preferred Stock was to be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by our board in its sole discretion or (ii) automatically upon the effectiveness of the amendment to the Certificate of Incorporation implementing a reverse stock split.

Removed

These secured notes incorporated the following major attributes; interest on the secured notes accrues at 33%, and the accrued interest would automatically convert into the securities offered in a qualified financing, at a per security price equal to the offering price of the qualified financing multiplied by 0.30 (70% discount). 80 · In connection with our April 2022 IPO, all of our outstanding shares of our preferred stock were converted into 3,279,117 shares of common stock. · In connection with our April 2022 IPO, all accrued dividends on our outstanding shares of preferred stock were converted into 984,429 shares of common stock. · In connection with our April 2022 IPO, all accrued interest on our secured notes was converted into (i) 426,767 shares of common stock and (ii) 426,767 common stock warrants. · From January 1, 2019, through April 2022, we granted to our consultants, employees, officers and directors options to purchase an aggregate of 2,151,694 shares of common stock at per share exercise prices ranging from $1.34 to $1.94 under our 2015 Stock Plan.

Added

Upon such redemption, the holder of the Series A Preferred Stock was to receive consideration of $1,000.00 in cash. We redeemed the one outstanding share of Series A preferred stock on March 28, 2023. 82 Item 6. [Reserved]

Removed

Included in those totals were grants made during 2021 of options to purchase an aggregate of 1,905,581 shares of Common Stock at a per share exercise price of $1.94. · From January 1, 2019, through April 2022, we issued an aggregate of 1,339 shares of Common Stock pursuant to the exercise of options by our consultants, employees, officers and directors. · In November 2022, we issued 40,000 restricted shares of Common Stock to a vendor in partial payment of vendor fees.

Removed

These sales and issuances were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act and/or Regulation D or Rule 701 promulgated thereunder, and did not involve any underwriters, underwriting discounts or commissions, or any public offering.

Removed

The persons and entities who received such securities have represented their intention to acquire these securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends are be affixed to all share certificates issued. All recipients had adequate access through their relationship with us to information about us.

Removed

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and we believe each transaction was exempt from the registration requirements of the Securities Act in reliance upon Section 4(2) of the Securities Act or Regulation D or Rule 701 promulgated under the Securities Act.

Removed

Furthermore, we affixed appropriate legends to the share certificates and instruments issued in each foregoing transactions setting forth that the securities had not been registered and the applicable restrictions on transfer. Use of Proceeds On April 21, 2022, the registration statement (SEC Registration No. 333-262026) for our IPO was declared effective.

Removed

There has been no material change in the planned use of proceeds from our IPO from that described in the related prospectus dated April 21, 2022, filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act.

Removed

As described in such IPO prospectus, we have used the IPO proceeds: (i) to retire all $2,000,000 of outstanding secured notes; (ii) to pay approximately $124,000 for a milestone license fee; (iii) to pay $458,000 of bonuses; (iv) to pay approximately $930,000 to reduce accounts payable; and (v) to pay ongoing operating expenses.

Removed

Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the period covered by this Annual Report.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

30 edited+22 added−14 removed17 unchanged

2022 filing

2023 filing

Equity-based compensation The Company accounts for stock-based awards in accordance with provisions of ASC Topic 718, Compensation—Stock Compensation , under which the Company recognizes the grant-date fair value of stock-based awards issued to employees and nonemployee board members as compensation expense on a straight-line basis over the vesting period of the award, while awards containing a performance condition are recognized as expense when the achievement of the performance criteria is considered probable.

The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options. The Company adjusts expense for actual forfeitures in the periods they occur. Until our April 2022 IPO, we were a private company with no active public market for our common equity.

The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options. The Company records expense for forfeitures in the periods they occur. Until our April 2022 IPO, we were a private company with no active public market for our common equity.

Emerging growth company status The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

Emerging growth company and smaller reporting company status The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

Contractual obligations and commitments Our current office lease and sublease expired on June 30, 2022. The Company does not have any contractual obligations not otherwise on our balance sheet as of December 31, 2022.

Contractual obligations and commitments Our prior office lease and sublease expired on June 30, 2022. The Company does not have any contractual obligations not otherwise on our balance sheet as of December 31, 2023.

As a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern. 85 Liquidity and capital resources Sources of liquidity To date, we have financed our operations primarily through private placements of preferred shares and debt financing, PPP loans that were forgiven, and an initial public offering on April 21, 2022.

As a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern. 87 Liquidity and capital resources Sources of liquidity To date, we have financed our operations primarily through private placements of preferred shares and debt financing, PPP loans that were forgiven, an equity line, an initial public offering on April 21, 2022, and a secondary public offering on February 27, 2024.

Financing activities During the year ended December 31, 2022, net cash provided by financing activities was $6,552,318, which included the net of $8,552,318 (net of underwriter compensation and deductions but excluding $25,000 pre-payment in 2021) of initial public offering proceeds and $2,000,000 repayment of promissory notes.

During the year ended December 31, 2022, net cash provided by financing activities was $6,187,258, which included $8,552,318 of initial public offering proceeds (net of underwriter compensation and deductions but excluding $25,000 pre-payment in 2021), $2,000,000 repayment of promissory notes, and $365,060 of IPO issuance costs.

We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we: · identify and support Key Opinion Leader (“KOL”) physicians and radiologists to help secure local payer coverage decisions and spine society support for our technology; · expand the network of imaging centers and physicians using NOCISCAN in each market such that the technology is widely available to patients covered by payers; · support surgeons, radiologists, Physical Medicine and Rehabilitation physicians, chiropractors, physical therapists, regenerative therapy physicians and medical device companies that address low back pain to initiate studies and report results; · build and expand clinical trials and registries to provide real world evidence of better outcomes when using Nociscan to help determine which discs to treat; · pursue value-based care contracts to share in the profits that result from the improved surgical outcomes we believe our technology enables in DLBP patients; hire additional business development, product management, operational and marketing personnel; · add operational and general administrative personnel which will support our product development programs, commercialization efforts, and our transition to operating as a public company.

This increase was driven by the $1.3 million beneficial conversion rate charged to interest expense for the conversion of all accrued interest on the Company's outstanding secured promissory notes into common shares and common stock warrants in connection with the effectiveness of the IPO.

This decrease was driven primarily by the $1.3 million beneficial conversion rate charged to interest expense in 2022 for the conversion of all accrued interest on the Company's outstanding secured promissory notes into common shares and common stock warrants in connection with the April 2022, initial public offering.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. 82 As of December 31, 2022, we had cash of approximately $1.5 million, which we believe will fund our operating expenses and capital expenditure requirements into the second quarter of 2023.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. As of December 31, 2023, we had cash of approximately $1.0 million.

Cost of Revenue is comprised of hosting and software costs, field support, UCSF royalty cost, NuVasive commission of 6%, partner fees (Radnet), and credit card fees. Total Cost of Revenue was $65,298 for the year ended December 31, 2022, compared to $69,175 for the year ended December 31, 2021, a decrease of 5.6%.

Cost of Revenue is comprised of hosting and software costs, field support, UCSF royalty cost, NuVasive commission of 6%, partner fees (Radnet), and credit card fees. Total Cost of Revenue was $75,728 for the year ended December 31, 2023, compared to $65,298 for the year ended December 31, 2022, an increase of 16.0%.

Since a public trading market for our common stock has been established in connection with the completion of our IPO, the fair value of the Company’s common stock underlying its equity awards is the quoted market price of the Company’s common stock on the grant date.

Recently issued accounting pronouncements We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our financial statements appearing at the end of this annual report, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.

Off-balance sheet arrangements We did not have, during the periods presented, and we do not currently have any off-balance sheet arrangements as defined in the rules and regulations of the Securities and Exchange Commission (“SEC”). 89 Recently issued accounting pronouncements We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our financial statements appearing at the end of this annual report, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.

We have irrevocably elected to apply of this extended transition period and, as a result, we will not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for public entities. Accordingly, our financial statements may not be comparable to other public companies that do not elect the extended transition period. 87

We have irrevocably elected not to “opt out” of this extended transition period and, as a result, we will not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for public entities.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful commercialization and continued development of our SaaS platform.

As of December 31, 2023, we had an accumulated deficit of approximately $44.3 million. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful commercialization and continued development of our SaaS platform.

Cash flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2022 2021 Cash used in operating activities $ (5,314,171 ) $ (2,399,949 ) Cash used in investing activities (207,870 ) (102,005 ) Cash provided by financing activities 6,552,318 2,939,500 Net increase (decrease) in cash and cash equivalents $ 1,030,276 $ 437,546 Operating activities During the year ended December 31, 2022, net cash used in operating activities was $5,314,171.

Cash flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2023 2022 (restated) Cash used in operating activities $ (3,646,947 ) $ (4,949,112 ) Cash used in investing activities (119,522 ) (207,870 ) Cash provided by financing activities 3,314,732 6,187,258 Net increase (decrease) in cash and cash equivalents $ (451,737 ) $ 1,030,276 88 Operating activities During the year ended December 31, 2023, net cash used in operating activities was $3,646,947.

Through the year ended December 31, 2022, we raised an aggregate of $33,145,148 of gross proceeds from $19,319,098 of preferred and common stock, $2,928,541 from the sale of convertible notes, $2,000,000 from secured promissory notes payable, $370,191 of PPP loans that were forgiven, and net proceeds of $8,527,318 from the IPO, after underwriter compensation and deductions.

Through December 31, 2023, we raised an aggregate of $32,603,097 of gross proceeds from $19,319,098 of preferred and common stock, $2,928,541 from the sale of convertible notes that were later converted to equity, $370,191 of PPP loans that were forgiven, $8,527,318 of net proceeds from the April 2022 IPO, and $1,457,949 of net proceeds from an equity line.

During the year ended December 31, 2022, Other Net expenses were $520, which included bank interest, government fees, and realized exchange rate losses.

During the year ended December 31, 2023, Other Net expenses were $562, which included bank interest, government fees, and realized exchange rate gain (losses). Net income (loss). The Company experienced a net loss of $4,911,374 for the year ended December 31, 2023, compared to a net loss of $7,068,593 for the year ended December 31, 2022.

Investing activities During the year ended December 31, 2022, and 2021, investing activities used $207,870 and $102,005 of cash, respectively. These investing activities consisted almost entirely of patent and license maintenance.

During the twelve months ended December 31, 2022, operating activities used $4,949,112, consisting primarily of compensation and benefit expense, consulting, and professional fees. Investing activities During the year ended December 31, 2023, and 2022, investing activities used $119,522 and $207,870 of cash, respectively. These investing activities consisted almost entirely of patent and license maintenance.

Total Interest expense was $1,507,546 for the year ended December 31, 2022, an increase of $1,032,635, from the $474,911 for the year ended December 31, 2021.

Total Interest expense was $608,288 for the year ended December 31, 2023, a decrease of $899,258, from the $1,507,546 for the year ended December 31, 2022.

The Company will need to raise additional funds to continue funding our technology development and commercialization efforts over the following twelve months. Management has plans to secure such additional funding.

The Company has based these estimates, however, on assumptions that may prove to be wrong, and could spend available financial resources much faster than we currently expect. The Company will need to raise additional funds to continue funding our technology development and commercialization efforts over the following twelve months. Management has plans to secure such additional funding.

Accordingly, we may need to obtain substantial additional funds to achieve our business objectives. Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity securities, current stockholders’ ownership interests may be diluted.

To the extent that we raise additional capital through the sale of equity securities, current stockholders’ ownership interests may be diluted.

Our principal executive offices are located at 8181 Arista Place, Suite 100, Broomfield, Colorado 80021. Our main telephone number is (833) 275-2266. Our internet website is www.aclarion.com. The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this Annual Report on Form 10-K (this “Form 10-K”).

Our principal executive offices are located at 8181 Arista Place, Suite 100, Broomfield, Colorado 80021. Our main telephone number is (833) 275-2266. Our internet website is www.aclarion.com.

Total revenues for the year ended December 31, 2022, were $60,444, which was a small increase of $152 from $60,292 for the year ended December 31, 2021. Volumes and pricing were consistent in each year. Cost of Revenue.

Total revenue for the year ended December 31, 2023, was $75,404, which was an increase of $14,960 from $60,444 for the year ended December 31, 2022. This increase was primarily due to growing utilization of Nociscan in third-party clinical studies. Volumes and pricing were generally consistent in each year. Cost of Revenue.

When used with other diagnostic tools, Nociscan provides critical insights into the location of a patient’s low back pain, giving physicians clarity to optimize treatment strategies. We have funded our operations with proceeds from the April 2022 IPO. Since inception we have incurred significant operating losses. As of December 31, 2022, we had an accumulated deficit of approximately $39.9 million.

When used with other diagnostic tools, Nociscan provides critical insights into the location of a patient’s low back pain, giving physicians clarity to optimize treatment strategies.

The increase in general and administrative expenses was driven by increased compensation expense related to the vesting of the Executive Chairman’s and executive’s outstanding common stock options, increased compensation expense related to new management, director and executive chairman bonuses, and an increase in directors’ and officers’ liability insurance. Interest Expense.

This decrease in general and administrative expenses was driven primarily by a higher 2022 compensation expense related to the vesting of the Executive Chairman’s and executive’s outstanding common stock options, offset in part by higher legal and accounting fees in 2023. Interest Expense.

As a result, we may need substantial additional funding to support our continuing operations and pursue our growth strategy.

We believe that with favorable payer coverage, the Company has the opportunity to more efficiently engage physicians and imaging centers that will adopt our technology. As a result, we may need substantial additional funding to support our continuing operations and pursue our growth strategy.

During the year 2021 the Company had an approximate $1.9 million fair value adjustment (expense) related to the issuance of preferred stock. 84 Critical accounting policies and use of estimates Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.

In general, the year ended December 31, 2023 excluded two significant expenses that were present during the year 2022, that being the compensation expense related to the vesting of the Executive Chairman’s and other executive’s outstanding common stock options, and the $1.3 million beneficial conversion rate charged to interest expense for the conversion of all accrued interest on the Company's outstanding secured promissory notes into common shares and common stock warrants in connection with the April, 2022, initial public offering. 86 Critical accounting policies and use of estimates Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.

Results of operations Operating activities: The following table summarizes our results of operations for the twelve months ended December 31, 2022, and 2021.

The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this Annual Report on Form 10-K. 84 Results of operations Operating activities: The following table summarizes our results of operations for the twelve months ended December 31, 2023, and 2022.

General and Administrative . General and administrative expenses were $4,467,815 for the year ended December 31, 2022, an increase of $2,642,324 or 144.7%, from $1,825,491 for the year ended December 31, 2021.

General and administrative expenses were $3,245,317 for the year ended December 31, 2023, a decrease of $745,402 or 18.7%, from $3,990,719 for the year ended December 31, 2022.

Sales and marketing expenses were $537,069 for the year ended December 31, 2022, compared to $330,814 for the year ended December 31, 2021, an increase of $206,255 or 62.3%, This increase was driven primarily by additional investment in website and branding development, press releases, attendance at conferences, and Key Opinion Leader consulting fees. Research and Development.

This increase was driven primarily by additional vesting of restricted stock units to our increased number of Key Opinion Leaders. Research and Development. Research and development expenses were $873,336 for the year ended December 31, 2023, compared to $1,067,992 for the year ended December 31, 2022, a decrease of $194,656 or 18.2%.

Removed

Our primary near-term growth strategy is to secure payer contracts (including insurance companies, self- insured employers, Medicare, Medicaid, workmen’s compensation boards et. al.) to cover our Category III CPT codes. We believe that with favorable payer coverage, the Company has the opportunity to more efficiently engage physicians and imaging centers that will adopt our technology.

Added

To date, we have financed our operations primarily through private placements of preferred shares and debt financing, PPP loans that were forgiven, an equity line, an initial public offering on April 21, 2022, and a secondary public offering on February 27, 2024. Since our inception we have incurred significant operating losses.

Removed

Effect of COVID-19 Pandemic on business operations The COVID-19 Pandemic is not currently impacting plans for marketing our products or our continuing development efforts, as all such activities have been conducted by us using remote work strategies. The Company cannot accurately predict the longer- term impact of the COVID-19 Pandemic on its business.

Added

Subsequent to December 31, 2023, the Company raised capital using an equity line and a secondary public offering (refer to Note 17 – Subsequent Events to our financial statements).

Removed

Year Ended December 31, 2021 to 2022 2022 2021 $ Change Revenue Revenue $ 60,444 $ 60,292 $ 152 Cost of revenue 65,298 69,175 (3,877 ) Net profit (loss) (4,854 ) (8,883 ) 4,029 Operating expenses: Sales and marketing 537,069 330,814 206,255 Research and development 1,088,778 787,850 300,928 General and administrative 4,467,815 1,825,491 2,642,324 Total operating expenses 6,093,662 2,944,155 3,149,507 Income (loss) from operations (6,098,516 ) (2,953,038 ) (3,145,478 ) Other income (expense): PPP loan forgiveness – 373,511 (373,511 ) Interest expense (1,507,546 ) (474,911 ) (1,032,635 ) Changes in fair value of redeemable preferred stock – (1,900,310 ) 1,900,310 Other, net 520 4,458 (3,938 ) Total other income (expense) (1,507,026 ) (1,997,252 ) 490,226 Income (loss) before income taxes (7,605,542 ) (4,950,290 ) (2,655,252 ) Income tax provision – – – Net income (loss) $ (7,605,542 ) $ (4,950,290 ) $ (2,655,252 ) Dividends accrued for preferred stockholders $ (415,523 ) $ (1,005,598 ) $ 590,075 Net income (loss) allocable to common stockholders $ (8,021,064 ) $ (5,955,888 ) $ (2,065,177 ) Net income (loss) per share allocable to common shareholders $ (1.31 ) $ (6.58 ) $ 5.26 Weighted average shares of common stock outstanding, basic and diluted 6,105,569 905,685 5,199,884 83 Years ended December 31, 2022, and 2021 Total revenues.

Added

We believe our current cash will fund our operating expenses and capital expenditure requirements into the third quarter of 2024, approaching our final maturity repayment of our unsecured non-convertible note, which is due in September 2024.

Removed

This decrease was primarily due to a variation in commissions. Sales and Marketing.

Added

Year Ended December 31, 2023 2022 2022 to 2023 (restated) $ Change Revenue Revenue $ 75,404 $ 60,444 $ 14,960 Cost of revenue 75,728 65,298 10,430 Gross profit (loss) (324 ) (4,854 ) 4,530 Operating expenses: Sales and marketing 757,004 498,003 259,001 Research and development 873,336 1,067,992 (194,656 ) General and administrative 3,245,317 3,990,719 (745,402 ) Total operating expenses 4,875,657 5,556,714 (681,057 ) Income (loss) from operations (4,875,981 ) (5,561,568 ) 685,587 Other income (expense): Interest expense (608,288 ) (1,507,546 ) 899,258 Changes in fair value of warrant and derivative liabilities 646,319 – 646,319 Loss on issuance of warrants (72,862 ) – (72,862 ) Other, net (562 ) 521 (1,083 ) Total other income (expense) (35,393 ) (1,507,025 ) 1,471,632 Income (loss) before income taxes (4,911,374 ) (7,068,593 ) 2,157,219 Income tax provision – Net income (loss) $ (4,911,374 ) $ (7,068,593 ) $ 2,157,219 Dividends accrued for preferred stockholders $ – $ (415,523 ) $ 415,523 Net income (loss) allocable to common stockholders $ (4,911,374 ) $ (7,484,116 ) $ 2,572,742 Net income (loss) per share allocable to common shareholders $ (8.82 ) $ (19.61 ) $ 10.79 Weighted average shares of common stock outstanding, basic and diluted 556,808 381,598 175,210 85 Years ended December 31, 2023, and 2022 Total revenues.

Removed

Research and development expenses were $1,088,778 for the year ended December 31, 2022, compared to $787,850 for the year ended December 31, 2021, an increase of $300,928 or 38.2%. This increase was due to a $123,828 contract milestone payment to UCSF in April 2022, and increased utilization of independent service providers in the areas of clinical and reimbursement.

Added

This increase was primarily due to higher year-over-year scan volumes and related Nociscan report output. Sales and Marketing. Sales and marketing expenses were $757,004 for the year ended December 31, 2023, compared to $498,003 for the year ended December 31, 2022, an increase of $259,001 or 52.0%.

Removed

There was a partial positive offset due to fewer months of accrued interest charges in 2022 related to both the secured promissory notes and convertible notes outstanding in 2021. Changes in Fair Value of Redeemable Preferred Stock.

Added

This decrease was primarily due to a $123,828 contract milestone payment to UCSF in April 2022, related to the initial public offering, and reduced expense in 2023 clinical services. General and Administrative .

Removed

In the year ended December 31, 2021, the Company recorded $1,900,310 of changes in the fair value of a B2 and B3 series preferred stock commitment prior to the issuance of those shares on December 3, 2021. Other Net Expenses .

Added

The 2023 interest expense was primarily due to the amortization of the note discount associated with the unsecured non-convertible promissory notes described in Note 11 to our financial statements -- Short Term Notes, Convertible Debt, and Derivative Liabilities. Changes in Fair Value of Warrant and Derivative Liabilities.

Removed

During the year ended December 31, 2021, Other Net expenses of $4,458 (gain) included a $5,000 grant from the California Relief Program and cash rewards from credit card programs, offset in part by government fees and realized exchange rate losses. Net income (loss).

Added

In the year ended December 31, 2023, the Company recorded $646,319 of changes in the fair value of the warrant and derivative liabilities associated with unsecured non-convertible promissory notes described in Note 4 -- Fair Value Measurements and Note 11 -- Short Term Notes, Convertible Debt, and Derivative Liabilities to our financial statements. Other Net Expenses .

Removed

The Company experienced a net loss of $7,605,542 for the year ended December 31, 2022, compared to a net loss of $4,950,290 for the year ended December 31, 2021. In general, the year 2022 included higher compensation expenses and interest charges specific to the April 2022 IPO.

Added

Subsequent to December 31, 2023, the Company raised capital using an equity line and a secondary public offering (refer to Note 17 – Subsequent Events to our financial statements).

Removed

Going Concern The Company believes that cash on hand of approximately $1.5 million, as of December 31, 2022, will be sufficient to fund current operating plans into the second quarter of 2023. The Company has based these estimates, however, on assumptions that may prove to be wrong, and could spend available financial resources much faster than we currently expect.

Added

Removed

As of December 31, 2022, we had cash, including $10,000 of restricted cash, of $1,482,806.

Added

We issued a $2,000,000 promissory note in June 2021 that was repaid in April 2022. On May 16, 2023, the Company entered into a securities purchase agreement with accredited investors for an unsecured non-convertible note financing. The Company received $1,250,000 of gross proceeds, with out-of-pocket issuance costs of $203,575.

Removed

This use of cash consisted primarily of compensation and benefit expense, bonuses in connection with the completion of the IPO, a milestone payment to UCSF, directors’ and officers’ liability insurance, and pre-IPO marketing activities. During the twelve months ended December 31, 2021, operating activities used $2,399,949, consisting primarily of compensation and benefit expense, consulting, and professional fees.

Added

On September 1, 2023, the Company closed the second tranche of this financing. The Company received an additional $750,000 of gross proceeds, with out-of-pocket issuance costs of $92,738. On November 1, 2023, the Company entered into a securities purchase agreement with accredited investors for an unsecured non-convertible note financing.

Removed

During the year ended December 31, 2021, net cash provided by financing activities was $2,939,500, which included $2,000,000 from issuance of promissory notes, $814,500 from our sale of convertible notes and the issuance of a $125,000 PPP loan to the Company. 86 Funding requirements Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate meaningful revenues.

Added

The Company received an additional $250,000 of gross proceeds, with out-of-pocket issuance costs of $65,363. As of December 31, 2023, we had cash, including $10,000 of restricted cash, of $1,031,069. Subsequent to December 31, 2023, the Company entered into a series of Exchange Agreements with accredited investors and issued additional common shares using the equity line.

Removed

Added

Additionally, the Company completed a secondary public offering in February 2024. See Note 17 – Subsequent Events to our financial statements for more information. We believe our current cash will fund our operating expenses and capital expenditure requirements into the third quarter of 2024, approaching our final maturity repayment of our unsecured non-convertible note, which is due in September 2024.

Added

Management is actively managing our cash position and working to secure longer-term funding in the first quarter of 2024.

Added

This use of cash consisted primarily of compensation and benefit expense, officers’ liability insurance, consulting, tax and audit fees, and maintain our quality system. Cash outlays in the year 2023 were relatively lower than the year 2022 due to longer procure-to-pay cycles.

Added

Financing activities During the year ended December 31, 2023, net cash provided by financing activities was $3,314,732, which included $2,250,000 of proceeds from unsecured non-convertible note financings, 1,462,949 of proceeds from an equity line, and $398,217 of cash issuance costs related to both the equity line and debt.

Added

Funding requirements Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate meaningful revenues. Accordingly, we may need to obtain substantial additional funds to achieve our business objectives. Adequate additional funds may not be available to us on acceptable terms, or at all.

Added

Accordingly, our financial statements may not be comparable to other public companies that do not elect the extended transition period. We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year.

Added

We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.

Added

If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Added

Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed3 unchanged

2022 filing

2023 filing

Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest rate sensitivity We had cash and cash equivalents totaling $1,482,806 as of December 31, 2022. These amounts are invested primarily in demand deposit accounts and money market funds.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest rate sensitivity We had cash and restricted cash totaling $1,031,069 as of December 31, 2023. These amounts are invested primarily in demand deposit accounts and money market funds.

Aclarion, Inc.ACONEarnings & Financial Report

Top changes in Aclarion, Inc.'s 2023 10-K

Item 1. Business

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Other ACON 10-K year-over-year comparisons