What changed in Aclarion, Inc.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of Aclarion, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+304 added−310 removedSource: 10-K (2025-04-09) vs 10-K (2024-03-28)
Top changes in Aclarion, Inc.'s 2024 10-K
304 paragraphs added · 310 removed · 244 edited across 4 sections
- Item 1. Business+251 / −256 · 213 edited
- Item 7. Management's Discussion & Analysis+48 / −43 · 27 edited
- Item 5. Market for Registrant's Common Equity+3 / −9 · 2 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+2 / −2 · 2 edited
Item 1. Business
Business — how the company describes what it does
213 edited+38 added−43 removed758 unchanged
Item 1. Business
Business — how the company describes what it does
213 edited+38 added−43 removed758 unchanged
2023 filing
2024 filing
Biggest changeRisks related to our intellectual property If we are unable to obtain, maintain, protect, enforce and defend patents or other intellectual property protection for our technology, or if the scope of our patents and other intellectual property protections is not sufficiently broad, or as a result of our existing or any future out-licenses of our intellectual property, our competitors could develop and commercialize products similar to or competitive with our products and services, our ability to continue to commercialize our technology, or our other products and services, may be harmed. 57 As with other medical device companies, our success depends, in large part, on our ability to obtain, maintain, protect, enforce and defend a proprietary position for our products and services, which will depend upon our success in obtaining and maintaining effective patent and other intellectual property protection in the United States and other countries into which we may expand our business in the future that relate to our technology and any other products, their manufacturing processes and their intended methods of use.
Biggest changeAs with other medical device companies, our success depends, in large part, on our ability to obtain, maintain, protect, enforce and defend a proprietary position for our products and services, which will depend upon our success in obtaining and maintaining effective patent and other intellectual property protection in the United States and other countries into which we may expand our business in the future that relate to our technology and any other products, their manufacturing processes and their intended methods of use.
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.
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.
At 2-years follow-up, 85% of patients improved when disc(s) identified as consistent with pain by our technology were included in a surgical treatment, compared to only 63% of patients when disc(s) identified as consistent with pain were not treated or disc(s) identified as consistent without pain were treated.
At 2-years follow-up, 85% of patients improved when disc(s) identified as consistent with pain by our technology were included in a surgical treatment, compared to only 63% of patients when disc(s) identified as consistent with pain were not treated or disc(s) identified as consistent without pain were treated.
Any of the foregoing could harm our business, financial condition and results of operations.
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.
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.
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.
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 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; 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.
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.
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 13 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 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.
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.
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.
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; · 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.” 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.
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”) 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.
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.
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; 68 · 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.
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.
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; 64 · 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.
The CCPA requires covered companies to, amongst other things, provide new and additional disclosures to California residents, and affords such residents new abilities to access their personal information and opt out of certain sales of personal information; and · The federal Physician Payments Sunshine Act, also known as Open Payments, requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually, with certain exceptions to the Centers for Medicare and Medicaid Services, or CMS, information related to payments or other “transfers of value” made to certain physicians or other healthcare providers, as defined by such law, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
The CCPA requires covered companies to, amongst other things, provide new and additional disclosures to California residents, and affords such residents new abilities to access their personal information and opt out of certain sales of personal information; and 42 · The federal Physician Payments Sunshine Act, also known as Open Payments, requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually, with certain exceptions to the Centers for Medicare and Medicaid Services, or CMS, information related to payments or other “transfers of value” made to certain physicians or other healthcare providers, as defined by such law, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
The table below further explains these four new Level III CPT Codes: CPT Code Description 0609T MRS, determination and localization of discogenic pain (cervical, thoracic, or lumbar); acquisition of single voxel data, per disc, in ≥3 discs 0610T MRS, determination and localization of discogenic pain (cervical, thoracic, or lumbar); transmit biomarker data for software analysis 0611T MRS, determination and localization of discogenic pain (cervical, thoracic, or lumbar); postprocessing for algorithmic analysis of biomarker data for determination of relative chemical differences between discs 0612T MRS, determination and localization of discogenic pain (cervical, thoracic, or lumbar); interpretation and report Due to a lack of operating capital, we have not yet begun to seek reimbursement coverage or promote or suggest our customers use these codes.
The table below further explains these four new Level III CPT Codes: CPT Code Description 0609T MRS, determination and localization of discogenic pain (cervical, thoracic, or lumbar); acquisition of single voxel data, per disc, in ≥3 discs 0610T MRS, determination and localization of discogenic pain (cervical, thoracic, or lumbar); transmit biomarker data for software analysis 0611T MRS, determination and localization of discogenic pain (cervical, thoracic, or lumbar); postprocessing for algorithmic analysis of biomarker data for determination of relative chemical differences between discs 0612T MRS, determination and localization of discogenic pain (cervical, thoracic, or lumbar); interpretation and report 18 Due to a lack of operating capital, we have not yet begun to seek reimbursement coverage or promote or suggest our customers use these codes.
The organization must document the specific qualifications of this individual relative to the required tasks; · The MDR requires rigorous post-market oversight of medical devices; · The MDR will allow the EU Commission or expert panels to publish “Common Specifications”, such as requirements for technical documentation, risk management, or clinical evaluation, which devices shall be required to meet; · Devices will be reclassified according to risk, contact, duration, and invasiveness; · Systematic clinical evaluation will be required for Class IIa and Class IIb medical devices; and · All currently approved devices must be recertified in accordance with the new MDR requirements.
The organization must document the specific qualifications of this individual relative to the required tasks; 27 · The MDR requires rigorous post-market oversight of medical devices; · The MDR will allow the EU Commission or expert panels to publish “Common Specifications”, such as requirements for technical documentation, risk management, or clinical evaluation, which devices shall be required to meet; · Devices will be reclassified according to risk, contact, duration, and invasiveness; · Systematic clinical evaluation will be required for Class IIa and Class IIb medical devices; and · All currently approved devices must be recertified in accordance with the new MDR requirements.
These three verification options sufficiently address the issue of a proprietary database or algorithm that is essentially a "black box" to users, creating primary reliance on the CDS software rather than aiding informed decision making. However, although we believe the above analysis is reasonable, whenever a company self classifies, there is a risk that FDA could disagree with the classification.
These three verification options sufficiently address the issue of a proprietary database or algorithm that is essentially a "black box" to users, creating primary reliance on the CDS software rather than aiding informed decision making. 24 However, although we believe the above analysis is reasonable, whenever a company self classifies, there is a risk that FDA could disagree with the classification.
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. Available Information Our internet address is www.aclarion.com.
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. 30 Available Information Our internet address is www.aclarion.com.
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.
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. Achieving and sustaining compliance with applicable federal and state anti-fraud and abuse laws may prove costly.
During 2022 and 2023 the Company received notices from Nasdaq indicating that the Company was not in compliance with (i) Nasdaq Listing Rule 5550(b)(1), which requires companies listed on The Nasdaq Stock Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing or (ii) Nasdaq Listing Rule 5550(a)(2) which requires companies listed on The Nasdaq Stock Market to maintain a minimum of a $1.00 bid price for continued listing.
During 2022, 2023, and 2024, the Company received notices from Nasdaq indicating that the Company was not in compliance with (i) Nasdaq Listing Rule 5550(b)(1), which requires companies listed on The Nasdaq Stock Market to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing or (ii) Nasdaq Listing Rule 5550(a)(2) which requires companies listed on The Nasdaq Stock Market to maintain a minimum of a $1.00 bid price for continued listing.
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 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. 70 If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.
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.
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. If we are unable to obtain patent term extension under the Hatch-Waxman Amendments, our business may be materially harmed.
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.
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.
They oversee the implementation of preventative, detective, and mitigative measures against potential cybersecurity incidents. · Executive management reports to the Board of Directors on cybersecurity matters, ensuring a top-down approach to cybersecurity risk management. 80 Cybersecurity Measures and Compliance · Aclarion uses leading cloud service providers, ensuring that our data handling and storage practices meet HIPAA and GDPR compliance standards.
They oversee the implementation of preventative, detective, and mitigative measures against potential cybersecurity incidents. · Executive management reports to the Board of Directors on cybersecurity matters, ensuring a top-down approach to cybersecurity risk management. Cybersecurity Measures and Compliance · Aclarion uses leading cloud service providers, ensuring that our data handling and storage practices meet HIPAA and GDPR compliance standards.
It was observed that with degenerative painful discs, proteoglycan reduces with the degeneration, and lactic acid elevates with the pain. Hence, the MRS-based test and identifiable structural and degenerative pain biomarkers were able to be identified. This work became the subject of the first patent granted to the Regents of the University of California and exclusively licensed to Aclarion.
It was observed that with degenerative painful discs, proteoglycan reduces with the degeneration, and lactic acid elevates with the pain. Hence, the MRS-based test and identifiable structural and degenerative pain biomarkers were able to be identified. 9 This work became the subject of the first patent granted to the Regents of the University of California and exclusively licensed to Aclarion.
A decline in the value of our company also could cause stockholders to lose all or part of their investment. 37 We have identified a material weakness in our internal control over financial reporting. Failure to maintain effective internal controls could cause our investors to lose confidence in us and adversely affect the market price of our common stock.
A decline in the value of our company also could cause stockholders to lose all or part of their investment. We have identified a material weakness in our internal control over financial reporting. Failure to maintain effective internal controls could cause our investors to lose confidence in us and adversely affect the market price of our common stock.
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.
Such proceedings also may result in substantial cost and require significant time from our management, even if the eventual outcome is favorable to us. 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. 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.
Third parties may in the future claim that our products infringe or violate their patents or other intellectual property rights. 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.
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.
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.
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.
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. Risk Factors. This Annual Report on Form 10-K contains forward-looking information based on our current expectations.
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.
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.
There are also risks that current compatible scanner platforms may become incompatible as a result of changes made to those scanners by SIEMENS, or by the scanner owner or related service provider, which would frustrate our ability to continue supporting that MR provider customer with our products.
There are also risks that current compatible scanner platforms may become incompatible as a result of changes made to those scanners by SIEMENS or Philips, or by the scanner owner or related service provider, which would frustrate our ability to continue supporting that MR provider customer with our products.
If we do not have adequate patent protection or other exclusivity for our products, our business, financial condition or results of operations could be adversely affected. We have limited foreign intellectual property rights and may not be able to protect our intellectual property and proprietary rights throughout the world, which could harm our business, financial condition and results of operations.
If we do not have adequate patent protection or other exclusivity for our products, our business, financial condition or results of operations could be adversely affected. 59 We have limited foreign intellectual property rights and may not be able to protect our intellectual property and proprietary rights throughout the world, which could harm our business, financial condition and results of operations.
Our rights to use these licensed technologies and the inventions claimed in the licensed patents, are subject to the continuation of, and our compliance with the terms of the license. The loss of this license would materially negatively affect our ability to pursue our business objectives and result in material harm to our business operations. Transactions with NuVasive, Inc.
Our rights to use these licensed technologies and the inventions claimed in the licensed patents, are subject to the continuation of, and our compliance with the terms of the license. The loss of this license would materially negatively affect our ability to pursue our business objectives and result in material harm to our business operations. 10 Transactions with NuVasive, Inc.
We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
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.
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. 45 A failure to comply with governmental regulatory requirements would have a negative impact upon our business.
If the breadth or strength of protection provided by the patents we hold or pursue with respect to our products is challenged, it could dissuade companies from collaborating with us to develop, or threaten our ability to commercialize, our technology. Patents have a limited lifespan.
If the breadth or strength of protection provided by the patents we hold or pursue with respect to our products is challenged, it could dissuade companies from collaborating with us to develop, or threaten our ability to commercialize, our technology. 54 Patents have a limited lifespan.
The occurrence of any of the foregoing could harm our business, financial condition and results of operations. We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time-consuming and unsuccessful.
The occurrence of any of the foregoing could harm our business, financial condition and results of operations. 62 We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time-consuming and unsuccessful.
There are also risks that these SIEMENS scanners do not perform reliably as intended or expected in performing data acquisition exams as required by our post-processing products, which would also frustrate the ability for our products to perform as intended.
There are also risks that these SIEMENS or Philips scanners do not perform reliably as intended or expected in performing data acquisition exams as required by our post-processing products, which would also frustrate the ability for our products to perform as intended.
We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs. 74 Risks related to the ownership of our common stock and IPO Warrants Our stock price may be volatile, and the value of our common stock and IPO Warrants may decline.
We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs. Risks related to the ownership of our common stock and IPO Warrants Our stock price may be volatile, and the value of our common stock and IPO Warrants may decline.
Currently, our software protocol is compatible with only certain MRS models and operating systems available from SIEMENS, as those SIEMENS models specifically provide for user-defined customizations available for running our custom pulse sequences on SIEMENS MRS equipment.
Currently, our software protocol is compatible with only certain MRS models and operating systems available from SIEMENS and PHILIPS, as those models specifically provide for user-defined customizations available for running our custom pulse sequences on SIEMENS and PHILIPS MRS equipment.
In addition to competing for market share, competitors may develop or acquire patents or other rights that may limit our ability to compete. Competition could result in price reductions, reduced margins and loss of our potential market share.
In addition to competing for market share, competitors may develop or acquire patents or other rights that may limit our ability to compete. 28 Competition could result in price reductions, reduced margins and loss of our potential market share.
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.
These larger customers, due to their enhanced purchasing power, may attempt to increase the pressure on product pricing. 25 Significant healthcare reforms have had an impact on medical device manufacturer and hospital revenues.
Therefore, failure to maintain or protect our information systems and data integrity effectively could harm our business, financial condition, and results of operations. We face potential liability related to the privacy of health information we obtain.
Therefore, failure to maintain or protect our information systems and data integrity effectively could harm our business, financial condition, and results of operations. 51 We face potential liability related to the privacy of health information we obtain.
Any such restriction on the use of our own software, or our inability to use open source or third-party software, could result in disruptions to our business or operations, or delays in our development of future products or enhancements of our existing products, such as our RNS System, which could impair our business. 71 Other risks facing our company If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit or halt the marketing and sale of our technology.
Any such restriction on the use of our own software, or our inability to use open source or third-party software, could result in disruptions to our business or operations, or delays in our development of future products or enhancements of our existing products, such as our RNS System, which could impair our business. 66 Other risks facing our company If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit or halt the marketing and sale of our technology.
However, the Gornet Study was a single (relatively small) clinical study at a single clinical center sponsored by us, and authored by, among others, a spine surgeon who has a financial interest in the Company, and there can be no assurance that the results of such study accurately support our conclusions related to the market opportunity of our products. 15 Market Opportunity The current NOCISCAN product addresses the $10B that is spent in the U.S. on spine fusion procedures annually.
However, the Gornet Study was a single (relatively small) clinical study at a single clinical center sponsored by us, and authored by, among others, a spine surgeon who has a financial interest in the Company, and there can be no assurance that the results of such study accurately support our conclusions related to the market opportunity of our products. 14 Market Opportunity The current NOCISCAN product addresses the $10B that is spent in the U.S. on spine fusion procedures annually.
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.
If there is a change in our ability to market our products it may harm our sales, business, financial condition and results of operations; 31 · 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.
Board of Directors Oversight: · While we do not have a dedicated committee for cybersecurity, our Board of Directors, supported by executive management, ensures comprehensive oversight of cybersecurity risks and strategies. 2.
Board of Directors Oversight: · While we do not have a dedicated committee for cybersecurity, our Board of Directors, supported by executive management, ensures comprehensive oversight of cybersecurity risks and strategies. 73 2.
Aclarion has developed proprietary signal processing software that transforms spectroscopy data into clear biomarkers. These biomarkers, which are exclusively licensed from the Regents of University of California, San Francisco (“UCSF”), are the key data inputs for our proprietary algorithms that, when applied, determine if an intervertebral disc is consistent with pain. Our patent portfolio includes 22 U.S.
Aclarion has developed proprietary signal processing software that transforms spectroscopy data into clear biomarkers. These biomarkers, which are exclusively licensed from the Regents of University of California, San Francisco (“UCSF”), are the key data inputs for our proprietary algorithms that, when applied, determine if an intervertebral disc is consistent with pain. Our patent portfolio includes 24 U.S.
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. 23 Government Regulation United States FDA.
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. 21 Government Regulation United States FDA.
Accordingly, both state and federal courts have jurisdiction to entertain such claims. Our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Accordingly, both state and federal courts have jurisdiction to entertain such claims. 72 Our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Any of the foregoing could materially and adversely affect our business, financial condition and results of operations. 70 Further, it is possible that others will independently develop the same or similar technology or product or otherwise obtain access to our unpatented technology, and in such cases, we could not assert any trade secret rights against such parties.
Any of the foregoing could materially and adversely affect our business, financial condition and results of operations. 65 Further, it is possible that others will independently develop the same or similar technology or product or otherwise obtain access to our unpatented technology, and in such cases, we could not assert any trade secret rights against such parties.
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. 27 Coverage and Reimbursement.
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.
The nexus for our focused relationship with Siemens resulted from our determination that SIEMENS scanner models were optimally positioned to support our product.
Initially, the nexus for our focused relationship with Siemens resulted from our determination that SIEMENS scanner models were optimally positioned to support our product.
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. 81 PART II
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. 74 PART II
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 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. 69 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 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.
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; · 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.
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.
Employees As of January 1, 2025, 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.
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.
These results could limit adoption of our technology, which would harm our sales, business, financial condition, and results of operations. 38 We expect to increase the size of our organization in the future, and we may experience difficulties in managing this growth.
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.
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.
Adequate additional financing may not be available to us on acceptable terms, or at all. 38 Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies and product candidates.
Adequate additional financing may not be available to us on acceptable terms, or at all. 34 Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies and product candidates.
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.
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.
If we are unable to successfully achieve substantial market acceptance and adoption of our technology, our sales, business, financial condition and results of operations would be harmed; · Our commercial software products currently depend on compatible use with a limited number of MR scanners that are provided by one MR scanner vendor, SIEMENS, which limits our ability to address the total potential patient population that our products could otherwise address in commercial sales.
If we are unable to successfully achieve substantial market acceptance and adoption of our technology, our sales, business, financial condition and results of operations would be harmed; · Our commercial software products currently depend on compatible use with a limited number of MR scanners that are provided by MR scanner vendors, SIEMENS and PHILIPS, which limits our ability to address the total potential patient population that our products could otherwise address in commercial sales.
Manifestations of these risks becoming actually realized in the marketplace could harm our business, financial condition, and results of operations. We are not subject to any exclusivity agreement or obligations with SIEMENS, nor do we have any fee sharing, royalty, or other exchange of moneys or payments between us and Siemens.
Manifestations of these risks becoming actually realized in the marketplace could harm our business, financial condition, and results of operations. We are not subject to any exclusivity agreement or obligations with SIEMENS or Philips, nor do we have any fee sharing, royalty, or other exchange of moneys or payments between us and Siemens or Philips at this time.
This product suite is also self-certified and CE Marked as a Class I medical device under MDD requirements, while we believe it is considered a Class II medical device and requiring Notified Body review and certification under newer MDR regulations (subject to a grace period until May 2024).
This product suite is also self-certified and CE Marked as a Class I medical device under MDD requirements, while we believe it is considered a Class II medical device and requiring Notified Body review and certification under newer MDR regulations (subject to a grace period until December 2028).
There are risks associated with our reliance on SIEMENS, and/or the MR service providers who own and operate the SIEMENS scanners, to maintain those scanners and their operating configurations in a manner that continues to support compatibility with our products.
There are risks associated with our reliance on these MR scanner vendors, and/or the MR service providers who own and operate the SIEMENS or Philips scanners, to maintain those scanners and their operating configurations in a manner that continues to support compatibility with our products.
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. 79 Item 1B Unresolved Staff Comments None.
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.
Item 1C Cybersecurity Risk Management and Strategy Aclarion is committed to maintaining the highest standards of cybersecurity to protect our systems, data, and operations against potential threats. Our cybersecurity risk management process is comprehensive and integrated into our overall risk management framework, ensuring continuous assessment, identification, and management of cybersecurity threats. 1.
Item 1B Unresolved Staff Comments None. Item 1C Cybersecurity Risk Management and Strategy Aclarion is committed to maintaining the highest standards of cybersecurity to protect our systems, data, and operations against potential threats. Our cybersecurity risk management process is comprehensive and integrated into our overall risk management framework, ensuring continuous assessment, identification, and management of cybersecurity threats. 1.
On May 2, 2012, following a prior period of informal collaboration, we entered a Memorandum of Understanding (“MOU”) with SIEMENS, under which SIEMENS agreed to support Aclarion’s research and development of what later became the NOCISCAN product suite for compatible use with SIEMENS scanners.
We have had a collaborative relationship with Siemens since 2011. On May 2, 2012, following a prior period of informal collaboration, we entered a Memorandum of Understanding (“MOU”) with SIEMENS, under which SIEMENS agreed to support Aclarion’s research and development of what later became the NOCISCAN product suite for compatible use with SIEMENS scanners.
Disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: · the scope of rights granted under the license agreement and other interpretation-related issues; · whether and the extent to which our technology and processes infringe, misappropriate or otherwise violate intellectual property rights of the licensor that are not subject to the license agreement; · our right to sublicense patent and other rights to third parties under collaborative development relationships; · our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products, and what activities satisfy those diligence obligations; · the priority of invention of any patented technology; and · the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our future licensors and us and our partners.
Disputes may also arise between us and our licensors regarding intellectual property subject to a license agreement, including: · the scope of rights granted under the license agreement and other interpretation-related issues; · whether and the extent to which our technology and processes infringe, misappropriate or otherwise violate intellectual property rights of the licensor that are not subject to the license agreement; · our right to sublicense patent and other rights to third parties under collaborative development relationships; · our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products, and what activities satisfy those diligence obligations; · the priority of invention of any patented technology; and · the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our future licensors and us and our partners. 58 In addition, the agreements under which we may license intellectual property or technology from third parties are likely to be complex and certain provisions in such agreements may be susceptible to multiple interpretations.
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.
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.
The U.S. patents subject to the agreement expire between 2026 and 2029, without considering any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
The agreement will expire upon the expiration or abandonment of the last of the licensed patents. The U.S. patents subject to the agreement expire between 2026 and 2029, without considering any possible patent term adjustment or extensions and assuming payment of all appropriate maintenance, renewal, annuity, or other governmental fees.
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.
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, 2024, we had 5 full-time employees, 1 part-time employee,1 full-time consultant, and 2 part-time consultants.
The Company regained compliance with the bid price requirement after the completion of its January 2024 reverse stock split. The Company recently regained compliance with the stockholders’ equity requirement after the completion of the Company’s February 2024 public offering.
The Company regained compliance with the bid price requirement after the completion of its January 2025 reverse stock split. The Company regained compliance with the stockholders’ equity requirement after the completion of the Company’s January 2025 public offering.
Our MR data post-processing software products are only compatible for post-processing disc MRS data acquired via certain scanner models and operating configurations provided only by one, third-party scanner vendor - SIEMENS.
Our MR data post-processing software products are only compatible for post-processing disc MRS data acquired via certain scanner models and operating configurations provided by two, third-party scanner vendors - SIEMENS and Philips.
We depend on these consultants and clinical investigators to conduct clinical studies and trials and monitor and analyze data from these studies and trials under the investigational plan and protocol for the study or trial and in compliance with applicable regulations and standards.
The consultants we engage may interact with clinical investigators to enroll patients in our clinical studies. We depend on these consultants and clinical investigators to conduct clinical studies and trials and monitor and analyze data from these studies and trials under the investigational plan and protocol for the study or trial and in compliance with applicable regulations and standards.
As of December 31, 2023, our intellectual property portfolio has 22 issued patent and 6 pending patent applications in the U.S., and 17 patent grants and 7 pending patent applications outside the United States.
As of December 31, 2024, our intellectual property portfolio has 24 issued patents and 6 pending patent applications in the U.S., and 17 patent grants and 7 pending patent applications outside the United States.
Moreover, a new privacy law, the California Privacy Rights Act, (“CPRA”) a consumer privacy ballot initiative that amends and expands the CCPA, was recently passed. The CPRA affords California residents significantly more control over their personal information, imposes heightened compliance obligations on covered companies, and establishes a new enforcement agency dedicated to consumer privacy.
Moreover, a new privacy law, the California Privacy Rights Act, (“CPRA”) a consumer privacy ballot initiative that amends and expands the CCPA, took effect on January 1, 2023. The CPRA affords California residents significantly more control over their personal information, imposes heightened compliance obligations on covered companies, and establishes a new enforcement agency dedicated to consumer privacy.
There is also a risk that SIEMENS loses its install base of compatible MR Scanners due to cannibalization by other non-compatible replacement scanner sales or fails to grow its install base of those compatible scanners, which could adversely affect the number and locations of compatible scanners for our own market share and penetration.
There is also a risk that SIEMENS and Philips combined lose their install base of compatible MR Scanners due to cannibalization by other non-compatible replacement scanner sales or fail to grow their install base of those compatible scanners, which could adversely affect the number and locations of compatible scanners for our own market share and penetration.
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 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.
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Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
2 edited+1 added−7 removed3 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
2 edited+1 added−7 removed3 unchanged
2023 filing
2024 filing
Biggest changeRecent 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.
Biggest changeRecent Sales of Unregistered Securities During the year ended December 31, 2024, all sales of unregistered securities by the Company have been previously reported on a Form 8-K or Form 10-Q, except that on August 15, 2024, we entered into a subscription agreement with an institutional investor, pursuant to which the Company sold 425,000 shares (equivalent to 47 shares following the 2025 Stock Splits) of Common Stock of the Company at a price of $0.29 per share (equivalent to $2,623.05 following the 2025 Stock Splits).
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.
As of December 31, 2024, there were approximately 145 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
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.
Added
The shares were issued pursuant to the Company’s Form 1-A Offering Statement qualified on June 24, 2024. Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the period covered by this Annual Report. Item 6. [Reserved]
Removed
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
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
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
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 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
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]
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
27 edited+21 added−16 removed26 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
27 edited+21 added−16 removed26 unchanged
2023 filing
2024 filing
Biggest changeYear 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.
Biggest changeYear Ended December 31, 2024 2023 2023 to 2024 $ Change Revenue Revenue $ 45,724 $ 75,404 $ (29,680 ) Cost of revenue 84,658 75,728 8,930 Gross profit (loss) (38,934 ) (324 ) (38,610 ) Operating expenses: Sales and marketing 976,554 757,004 219,550 Research and development 888,766 873,336 15,430 General and administrative 3,608,793 3,245,317 363,476 Total operating expenses 5,474,113 4,875,657 598,456 Income (loss) from operations (5,513,047 ) (4,875,981 ) (637,066 ) Other income (expense): Interest expense (535,470 ) (608,288 ) 72,818 Gain (Loss) on settlement of debt 6,058 – 6,058 Gain (Loss) on exchange of debt (1,073,317 ) – (1,073,317 ) Changes in fair value of warrant and derivative liabilities 335,033 646,319 (311,286 ) Gain (Loss) on issuance of warrants – (72,862 ) 72,862 Penalties and settlements (212,453 ) – (212,453 ) Other, net 269 (562 ) 831 Total other income (expense) (1,479,880 ) (35,393 ) (1,444,487 ) Income (loss) before income taxes (6,992,927 ) (4,911,374 ) (2,081,553 ) Income tax provision – – Net income (loss) $ (6,992,927 ) $ (4,911,374 ) $ (2,081,553 ) Dividends accrued for preferred stockholders $ (59,675 ) $ – $ (59,675 ) Net income (loss) allocable to common stockholders $ (7,052,602 ) $ (4,911,374 ) $ (2,141,227 ) Net income (loss) per share allocable to common shareholders $ (7,480 ) $ (79,782 ) $ 72,302 Weighted average shares of common stock outstanding, basic and diluted 943 62 881 77 Years ended December 31, 2024, and 2023 Total revenues.
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.
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.
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.
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, 2024.
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.
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, 2024, we had cash of approximately $0.46 million.
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.
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. 76 Results of operations Operating activities: The following table summarizes our results of operations for the twelve months ended December 31, 2024, and 2023.
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.
As of December 31, 2024, we had an accumulated deficit of $51.3 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.
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. 83 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 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.
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%.
Cost of Revenue is comprised of hosting and software costs, field support, UCSF royalty cost, NuVasive commission of 6% (expired in 2023), partner fees (Radnet), and credit card fees. Total Cost of Revenue was $84,658 for the year ended December 31, 2024, compared to $75,728 for the year ended December 31, 2023, an increase of 11.8%.
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.
During the twelve months ended December 31, 2023, operating activities used $3,646,947, consisting primarily of compensation and benefit expense, consulting, and professional fees. 80 Investing activities During the year ended December 31, 2024, and 2023, investing activities used $321,937 and $119,522 of cash, respectively. These investing activities consisted almost entirely of patent and license maintenance.
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.
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.
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.
This use of cash consisted primarily of compensation and benefit expense, consulting, tax and audit fees, officers’ liability insurance, and maintaining our quality system. Cash outlays in the year 2024 were relatively higher than the year 2023 due to an increase in annual prepayments, settlement of long-standing accounts payable, and shorter procure-to-pay cycles.
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 .
In the year ended December 31, 2024, the Company recorded a favorable change of $335,033 in the fair value of the warrant and derivative liabilities associated with unsecured non-convertible promissory notes described in Note 3 -- Fair Value Measurements and Note 10 -- Short Term Notes, Convertible Debt, and Derivative Liabilities to our financial statements.
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.
Cash flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2024 2023 Cash used in operating activities $ (5,271,609 ) $ (3,646,947 ) Cash used in investing activities (321,937 ) (119,522 ) Cash provided by financing activities 5,026,138 3,314,732 Net increase (decrease) in cash and cash equivalents $ (567,408 ) $ (451,737 ) Operating activities During the year ended December 31, 2024, net cash used in operating activities was $5,271,609.
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.
During the year ended December 31, 2024, Other Net income was $269, which included bank interest, government fees, and realized exchange rate gain (losses). During the year ended December 31, 2023, the company recorded expense of $562. Net income (loss).
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.
Total revenue for the year ended December 31, 2024, was $45,724, which was an decrease of $29,680 from $75,404 for the year ended December 31, 2023. This decrease was primarily due to the reduced utilization of Nociscan in third-party clinical studies, offset in part by and increase in patient-pay volumes. Cost of Revenue.
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.
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. 81 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.
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. Going Concern As of December 31, 2023, we had cash of approximately $1.0 million.
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. 79 Liquidity and capital resources Sources of liquidity To date, we have financed our operations primarily through private placements and public offerings of our equity and debt securities.
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.
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. 75 To date, we have financed our operations primarily through private placements and public offerings of our equity and debt securities. Since our inception we have incurred significant operating losses.
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.
Total Interest expense was $535,470 for the year ended December 31, 2024, a decrease of $72,818, from the $608,288 for the year ended December 31, 2023. Interest expense was primarily the amortization of note discounts associated with the unsecured non-convertible promissory notes described in Note 10 to our financial statements -- Short Term Notes, Convertible Debt, and Derivative Liabilities.
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.
General and administrative expenses were $3,608,793 for the year ended December 31, 2024, an increase of $363,476 or 11.2%, from $3,245,317 for the year ended December 31, 2023.
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.
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 2026. Management is actively managing our cash position and continually working to secure long-term funding.
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.
As a result, we may need substantial additional funding to support our continuing operations and pursue our growth strategy.
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%.
Sales and marketing expenses were $976,554 for the year ended December 31, 2024, compared to $757,004 for the year ended December 31, 2023, an increase of $219,550 or 29.0%.
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.
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”).
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.
Subsequent to December 31, 2024, the Company raised capital with two registered direct offerings and one underwritten public offering (refer to Note 17 – Subsequent Events to our financial statements). We believe our current cash will fund our operating expenses and capital expenditure requirements into the third quarter of 2026.
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.
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.
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.
This increase in general and administrative expenses was driven by increased investor relation services, non-cash expense related to the equity line of credit, and a higher bonus accrual, offset in part by lower Director & Officer insurance premiums in 2024. Interest Expense.
Removed
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.
Added
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.
Removed
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).
Added
While Nociscan report volumes decreased from the year 2023 to 2024, the increase in Cost of Revenue was primarily due to a higher mix of Nociscan volume in Radnet accounts, which are subject to partner fees. Sales and Marketing.
Removed
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%.
Added
This increase was driven primarily by the initiation of the Clarity clinical study in 2024 and co-marketing agreements in select markets, offset in part by the conclusion in 2024 of restricted stock unit vesting expense related to our Key Opinion Leaders. Research and Development. Research and development expense is primarily related to personnel and quality and regulatory systems.
Removed
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 .
Added
Total expenses were fairly consistent year-over-year with $888,766 for the year ended December 31, 2024, compared to $873,336 for the year ended December 31, 2023, an increase of $15,430 or 1.8%. General and Administrative .
Removed
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.
Added
In 2024, the company retired all notes payable through cash payoff or exchange for common and/or preferred stock. Gain (Loss) on Settlement of Debt . During the year ended December 31, 2024, the Company negotiated favorable discounts to outstanding accounts payable in the amount of $117,985.
Removed
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.
Added
This gain was offset almost entirely by the accelerated amortization of note discounts of $111,927 related to the payoff in cash of the Series C Notes Payable in March 2024. The net gain for the year ended December 31, 2024, was $6,058. Gain (Loss) on Exchange of Debt .
Removed
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).
Added
During the year ended December 31, 2024, the Company recorded a loss of $1,066,732 in the first quarter related to the accelerated amortization of note discounts triggered by the exchange of principal and accrued interest on the Senior Notes Payable for shares of common stock.
Removed
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
Additionally, in the third quarter of 2024, the Company recorded a loss of $6,585 related to the accelerated amortization of note discounts triggered by the exchange of principal and accrued interest on the Series B Notes Payable for newly issued Series B convertible preferred stock described in Note 10 to our financial statements -- Short Term Notes, Convertible Debt, and Derivative Liabilities.
Removed
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.
Added
Changes in Fair Value of Warrant and Derivative Liabilities.
Removed
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.
Added
The favorable change in fair value of the warrant and derivative liabilities recorded in the year ended December 31, 2023, was $646,319. Gain (Loss) on Issuance of Warrants .
Removed
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.
Added
During the year ended December 31, 2023, the Company incurred issuance costs of $72,862 relating to the Series C Notes Payable warrants which were recorded as a day 1 expense due to the liability classification of such warrants. 78 Penalties and Settlements.
Removed
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.
Added
During the year ended December 31, 2024, the Company recorded a $25,000 settlement charge related to the timely registration of Series C Notes Payable commitment shares, and a $187,453 charge recognizing the forward element related to equity line commitment shares. Other Net Expenses .
Removed
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.
Added
The Company experienced a net loss of $6,992,927 for the year ended December 31, 2024, compared to a net loss of $4,911,374 for the year ended December 31, 2023, an increase of $2,081,552 (42%).
Removed
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.
Added
As of December 31, 2023, we had cash, including $10,000 of restricted cash, of $1,031,069. During the year ended December 31, 2024, we raised an aggregate of $6.6 million of gross proceeds and reduced debt and accrued interest by $2.7 million.
Removed
Management is actively managing our cash position and working to secure longer-term funding in the first quarter of 2024.
Added
Gross proceeds raised in the year 2024 included $1.8 million from our equity line, $3.0 million from a February 27, 2024 public offering, $1.0 million from our sale of Series C Preferred Stock, $0.5 million from three Regulation A+ offerings, and $0.3 million from an at-the-market offering.
Removed
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.
Added
The Company retired $2.7 million of outstanding debt through a combination of a $1.5 million conversion of debt to common stock, a $0.9 million exchange of debt for Series B Preferred Stock, and a cash payoff of $0.3 million. As of December 31, 2024, we had cash of $463,661, including $10,000 of restricted cash.
Added
Subsequent to December 31, 2024, the Company raised an aggregate of $20.1 million of gross proceeds through a combination of a public offering of units ($14.6 million) consisting of common shares, A warrants, and B warrants, two registered direct offerings ($5.2 million) of common stock, and the exercise of Series C Preferred warrants ($0.3 million).
Added
Financing activities During the year ended December 31, 2024, net cash provided by financing activities was $5,026,138, which included gross proceeds of $1,754,032 from our equity line, $3,001,495 from a February 27, 2024, public offering, $1,000,000 from our sale of Series C Preferred Stock, $529,254 from three Regulation A+ offerings, and $288,294 from an at-the-market offering.
Added
Cash issuance costs related to all financing activities totaled $1,254,964. The Company used cash in the year 2024 to retire $300,973 of outstanding debt.
Added
Accordingly, our financial statements may not be comparable to other public companies that do not elect the extended transition period.
Added
We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior December 31st, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
2 edited+0 added−0 removed2 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
2 edited+0 added−0 removed2 unchanged
2023 filing
2024 filing
Biggest changeWe consider all highly liquid debt instruments purchased with a maturity of three months or less and SEC-registered money market mutual funds to be cash equivalents. The primary objectives of our investing activities are capital preservation, meeting our liquidity needs and, with respect to investing client funds, generating interest income while maintaining the safety of principal.
Biggest changeWe consider all highly liquid debt instruments purchased with a maturity of three months or less and SEC-registered money market mutual funds to be cash equivalents. The primary objectives of our investing activities are capital preservation, meeting our liquidity needs, and generating interest income while maintaining the safety of principal.
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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest rate sensitivity We had cash and restricted cash totaling $463,661 as of December 31, 2024. These amounts are invested primarily in demand deposit accounts and money market funds.