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Aclarion, Inc.

Aclarion, Inc.ACON決算レポート

Nasdaq · ヘルスケア · サービス-医療検査施設

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

What changed in Aclarion, Inc.'s 10-K — 2024 vs 2025

Top changes in Aclarion, Inc.'s 2025 10-K

391 paragraphs added · 404 removed · 298 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

261 edited+42 added−82 removed666 unchanged
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.
We believe NOCISCAN advantages include: (a) enhancing the ability and value of otherwise standard lumbar MRI exams to, for the first time, reliably identify chemically painful discs causing DLBP; and (b) providing a “Virtual Discogram™” as an entirely non-invasive, objectively quantitative, pain-free, non-significant risk, and more widely adoptable alternative to needle-based PD exams (which share none of those advantages). 12 More specifically, NOCISCAN offers many specific advantages to the marketplace, from a diagnostic point of view, including: 1) Readily and widely adoptable; 2) Non-invasive; 3) Non-painful; 4) Nonsignificant risk to patients; 5) Objective, quantitative diagnostic information; 6) Enhances the diagnostic value of MR exams for painful disc diagnosis in DLBP patients; 7) Correlative to the modern standard and accurate technique of PD diagnostic exams for DLBP diagnosis - but without the invasive, painful, subjective, potentially harmful, and limited adoptability shortcomings of PD; 8) First and only known ability to non-invasively assess degenerative painful disc chemistry; 9) More informed ability to reliably diagnose painful vs. non-painful discs; 10) More informed ability to predict the potential for ASD to develop or advance in discs next to neighboring discs that are initial surgical targets; 11) More informed ability to reliably diagnose actual ASD in discs following a prior surgery in neighboring discs; 12) Potential for improved patient outcomes in DLBP patients resulting from more informed diagnostic acuity for painful vs. non-painful discs and related targeted treatment planning; and 13) The only known non-invasive disc chemistry measurement and monitoring tool to support clinical research, development, and evaluation of new therapies, e.g. injectable biologics/cell therapies, that have therapeutic mechanisms of action related to disc chemistry interactions and changes.
We believe NOCISCAN advantages include: (a) enhancing the ability and value of otherwise standard lumbar MRI exams to, for the first time, reliably identify chemically painful discs causing DLBP; and (b) providing a “Virtual Discogram™” as an entirely non-invasive, objectively quantitative, pain-free, non-significant risk, and more widely adoptable alternative to needle-based PD exams (which share none of those advantages). 7 More specifically, NOCISCAN offers many specific advantages to the marketplace, from a diagnostic point of view, including: 1) Readily and widely adoptable; 2) Non-invasive; 3) Non-painful; 4) Nonsignificant risk to patients; 5) Objective, quantitative diagnostic information; 6) Enhances the diagnostic value of MR exams for painful disc diagnosis in DLBP patients; 7) Correlative to the modern standard and accurate technique of PD diagnostic exams for DLBP diagnosis - but without the invasive, painful, subjective, potentially harmful, and limited adoptability shortcomings of PD; 8) First and only known ability to non-invasively assess degenerative painful disc chemistry; 9) More informed ability to reliably diagnose painful vs. non-painful discs; 10) More informed ability to predict the potential for ASD to develop or advance in discs next to neighboring discs that are initial surgical targets; 11) More informed ability to reliably diagnose actual ASD in discs following a prior surgery in neighboring discs; 12) Potential for improved patient outcomes in DLBP patients resulting from more informed diagnostic acuity for painful vs. non-painful discs and related targeted treatment planning; and 13) The only known non-invasive disc chemistry measurement and monitoring tool to support clinical research, development, and evaluation of new therapies, e.g., injectable biologics/cell therapies, that have therapeutic mechanisms of action related to disc chemistry interactions and changes.
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.
We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded if we were to prevail may not be commercially meaningful. In addition, our patents or the patents of our licensing partners also may become involved in inventorship, priority or validity disputes.
We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded if we were to prevail may not be commercially meaningful. In addition, our patents or the patents of our licensing partners may also become involved in inventorship, priority or validity disputes.
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.
Despite the protections we do place on our intellectual property or other proprietary rights, monitoring unauthorized use and disclosure of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property or other proprietary rights have or will be adequate.
Despite the protections we place on our intellectual property or other proprietary rights, monitoring unauthorized use and disclosure of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property or other proprietary rights have or will be adequate.
These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock.
These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock.
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; 40 · 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 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.
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, 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.
The commercial success of our technology will continue to depend on a number of factors, including the following: · the actual and perceived effectiveness, safety and reliability, and clinical benefit, of our technology, especially relative to alternative diagnostic systems and devices; · the prevalence and severity of any adverse patient events involving the use of our technology; · the degree to which physicians, surgeons and clinicians, patients and imaging centers adopt our technology; · the availability, relative cost and perceived advantages and disadvantages of alternative technologies, or other diagnostic or treatment methods, for spine and back pain; · the results of additional clinical and other studies relating to the health, safety, economic or other benefits of our technology; · whether key thought leaders in the medical community accept that our clinical efficacy and safety results are sufficiently meaningful to influence their decision to adopt our technology over other spine and back pain diagnostics; · the extent to which we are successful in educating physicians, surgeons, clinicians, patients, and imaging facilities about the appropriate (and inappropriate) uses and benefits of our technology; · the strength of our marketing and distribution infrastructure, including our ability to drive adoption and utilization of our technology, as well as our ability to develop and maintain relationships with MRI manufacturers and imaging centers; · our ability to obtain, maintain, protect, enforce and defend our intellectual property rights, in and to our technology; · our ability to maintain compliance with all legal and regulatory requirements, including those applicable to our technology; · our ability to maintain our contractual relationships with our vendors and component suppliers, including single-source vendors and suppliers through which we obtain critical components for (or compatible use with) our technology; · the establishment and continued reimbursement coverage of and adequate payment for the use of our technology and · our ability to continue to attract and retain key personnel.
The commercial success of our technology will continue to depend on a number of factors, including the following: · the actual and perceived effectiveness, safety and reliability, and clinical benefit, of our technology, especially relative to alternative diagnostic systems and devices; · the prevalence and severity of any adverse patient events involving the use of our technology; · the degree to which physicians, surgeons and clinicians, patients and imaging centers adopt our technology; · the availability, relative cost and perceived advantages and disadvantages of alternative technologies, or other diagnostic or treatment methods, for spine and back pain; · the results of additional clinical and other studies relating to the health, safety, economic or other benefits of our technology; · whether key thought leaders in the medical community accept that our clinical efficacy and safety results are sufficiently meaningful to influence their decision to adopt our technology over other spine and back pain diagnostics; · the extent to which we are successful in educating physicians, surgeons, clinicians, patients, and imaging facilities about the appropriate (and inappropriate) uses and benefits of our technology; 34 · the strength of our marketing and distribution infrastructure, including our ability to drive adoption and utilization of our technology, as well as our ability to develop and maintain relationships with MRI manufacturers and imaging centers; · our ability to obtain, maintain, protect, enforce and defend our intellectual property rights, in and to our technology; · our ability to maintain compliance with all legal and regulatory requirements, including those applicable to our technology; · our ability to maintain our contractual relationships with our vendors and component suppliers, including single-source vendors and suppliers through which we obtain critical components for (or compatible use with) our technology; · the establishment and continued reimbursement coverage of and adequate payment for the use of our technology and · our ability to continue to attract and retain key personnel.
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.
For further discussion of the risks relating to intellectual property, see the section titled “Risk factors — Risks Related to our Intellectual Property.” 16 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): ACLARION™ - Corporate brand name NOCIMED – Previous 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; 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.
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.
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.
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; 62 · it is possible that our current or future pending patent applications will not lead to issued patents; · it is possible that there are prior public disclosures that could invalidate our patents, or parts of our patents; · it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims related to our products or technology similar to ours; · it is possible that our patents or patent applications omit individuals that should be listed as inventors or include individuals that should not be listed as inventors, which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable; · issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; · the claims of our patents or patent applications, if and when issued, may not cover our products or technologies; · the laws of foreign countries may not protect our proprietary rights or the rights of current or future licensors or collaborators to the same extent as the laws of the United States; · the inventors of our patents or patent applications may become involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors; · our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; · we have engaged in scientific collaborations in the past and will continue to do so in the future and our collaborators may develop adjacent or competing products that are outside the scope of our patents; · we may not develop additional proprietary technologies that are patentable; · our trade secrets may be misappropriated, without an ability to know or reverse engineer the misappropriation, or we may lose trade secret protections based on a failure to properly establish or maintain them; · certain employees, consultants, or other collaborators may be engaged on terms that do not prevent them from inventing improvements, modifications, alterations, derivations of our technologies and methods, or otherwise from inventing alternative or new technologies or methods and pursuing them outside of and competitive with the company; · the patents of others may harm our business; or · we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property, and thereby potentially preventing us from continuing to use those related technologies or practice those related methods.
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.
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: 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; 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 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: PD is highly invasive, whereas our test is entirely non-invasive; PD is painful by deliberate design, whereas our test is entirely pain-free; 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; 25 PD is subjective, based both on patient reporting of subjective pain and physician subjectivity in interpreting results, whereas our test is entirely objective; and 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.
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 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.
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.
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 8 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.
If these third parties or employees do not successfully carry out their duties, comply with Good Clinical Practice (GCP) guidelines and other applicable requirements, or meet expected deadlines, or if the quality, completeness or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical study protocols or for other reasons, our clinical studies or trials may need to be extended, delayed or terminated by us or be placed on clinical hold by FDA, or may otherwise prove to be unsuccessful, and we may have to conduct additional studies, which would significantly increase our costs.
If these third parties or employees do not successfully carry out their duties, comply with Good Clinical Practice (GCP) guidelines and other applicable requirements, or meet expected deadlines, or if the quality, completeness or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical study protocols or for other reasons, our clinical studies or trials may need to be extended, delayed or terminated by us or be placed on clinical hold by FDA or the IRB, or may otherwise prove to be unsuccessful, and we may have to conduct additional studies, which would significantly increase our costs.
Our risk management strategy is designed to adapt to the evolving cybersecurity landscape, ensuring that we stay ahead of potential threats. · Our cybersecurity risk management processes are integrated into our risk management system, ensuring a holistic approach to identifying and mitigating risks across the organization. · Aclarion has established protocols to manage and mitigate risks associated with third-party service providers, including continuous monitoring of third-party practices. · The management team has extensive experience in medical device and software productization, including addressing cybersecurity threats. 2.
Our risk management strategy is designed to adapt to the evolving cybersecurity landscape, ensuring that we stay ahead of potential threats. · Our cybersecurity risk management processes are integrated into our risk management system, ensuring a holistic approach to identifying and mitigating risks across the organization. · Aclarion has established protocols to manage and mitigate risks associated with third-party service providers, including continuous monitoring of third-party practices. · The management team has extensive experience in medical device and software productization, including addressing cybersecurity threats. 72 2.
Additionally, any of these incidents could result in the theft, unauthorized access, acquisition, use, disclosure, modification, or misappropriation of personal information of patients that use our products, trial participants, employees, third parties with whom we conduct business, as well as other confidential, proprietary, and sensitive data, and can also result in fraudulent activity, system disruptions or shutdowns. 50 The occurrence of any actual or attempted breach, failure of security or fraudulent activity, the reporting of such an incident, whether accurate or not, or our failure to make adequate or timely disclosures to the public or law enforcement agencies following any such event, whether due to delayed discovery or a failure to follow existing protocols, could result in claims made against us or our service providers, which could result in state and/or federal litigation and related financial liabilities, as well as criminal penalties or civil liabilities, regulatory actions from state and/or federal governmental authorities, and significant fines, orders, sanctions, litigation and claims against us by consumers or third parties and related indemnification obligations.
Additionally, any of these incidents could result in the theft, unauthorized access, acquisition, use, disclosure, modification, or misappropriation of personal information of patients that use our products, trial participants, employees, third parties with whom we conduct business, as well as other confidential, proprietary, and sensitive data, and can also result in fraudulent activity, system disruptions or shutdowns. 48 The occurrence of any actual or attempted breach, failure of security or fraudulent activity, the reporting of such an incident, whether accurate or not, or our failure to make adequate or timely disclosures to the public or law enforcement agencies following any such event, whether due to delayed discovery or a failure to follow existing protocols, could result in claims made against us or our service providers, which could result in state and/or federal litigation and related financial liabilities, as well as criminal penalties or civil liabilities, regulatory actions from state and/or federal governmental authorities, and significant fines, orders, sanctions, litigation and claims against us by consumers or third parties and related indemnification obligations.
This clinical study included 139 chronic low back pain patients who collectively underwent a NOCISCAN exam across 623 lumbar discs. Seventy-three patients underwent surgical intervention, consisting of fusion or disc replacement, and reached six months follow up. Clinical improvement post surgically was evaluated using the industry standard Oswestry Disability Index (ODI), and the Visual Analog Scale (VAS).
This clinical study included 139 patients with chronic low back pain who collectively underwent a NOCISCAN exam across 623 lumbar discs. Seventy-three patients underwent surgical intervention, consisting of fusion or disc replacement, and reached six months of follow up. Clinical improvement post-surgically was evaluated using the industry standard Oswestry Disability Index (ODI), and the Visual Analog Scale (VAS).
For compatible MRI machines, that do not have spectroscopy hardware and software installed, the onetime cost of the hardware and software ranges from $25,000 to $50,000. Currently, our NOCISCAN platform is only compatible with certain MR scanner models provided by SIEMENS, of which there are an estimated 1,500 in the United States, and 4,320 worldwide.
For compatible MRI machines, that do not have spectroscopy hardware and software installed, the onetime cost of the hardware and software ranges from $25,000 to $50,000. Currently, our NOCISCAN platform is only compatible with certain MR scanner models provided by SIEMENS and PHILIPS, of which there are an estimated 1,500 in the United States, and 4,320 worldwide.
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.
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.
We have an existing license with the Board of Regents of the University of California, and which covers multiple patents and patent applications for inventions that are incorporated into our products, and if we are unable to maintain this license, we may not be able to legally market or sell our current or future products, which would harm our sales, business, financial condition, and results of operations.
We have an existing license with the Regents of the University of California, and which covers multiple patents and patent applications for inventions that are incorporated into our products, and if we are unable to maintain this license, we may not be able to legally market or sell our current or future products, which would harm our sales, business, financial condition, and results of operations.
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.
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. 56 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.
We will remain an emerging growth company until the earliest of (i) the end of the fiscal year following the fifth anniversary of the completion of our IPO, (ii) the first fiscal year after our annual gross revenues exceed $1.235 billion, (iii) the date on which we have, during the immediately preceding three-year period, issued more than $1.00 billion in non-convertible debt securities, or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year. 71 Provisions in our corporate charter and our bylaws and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
We will remain an emerging growth company until the earliest of (i) the end of the fiscal year following the fifth anniversary of the completion of our IPO, (ii) the first fiscal year after our annual gross revenues exceed $1.235 billion, (iii) the date on which we have, during the immediately preceding three-year period, issued more than $1.00 billion in non-convertible debt securities, or (iv) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year. 70 Provisions in our corporate charter and our bylaws and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Accordingly, these various initiatives have created increased price sensitivity over healthcare products generally and may impact demand for our products and technologies. Healthcare cost containment efforts have also prompted domestic hospitals and other customers of medical devices to consolidate into larger purchasing groups to enhance purchasing power, and this trend is expected to continue.
Accordingly, these various initiatives have created increased price sensitivity over healthcare products generally and may impact demand for our products and technologies. 21 Healthcare cost containment efforts have also prompted domestic hospitals and other customers of medical devices to consolidate into larger purchasing groups to enhance purchasing power, and this trend is expected to continue.
As a result, the success rates of surgical care for LBP ranges from 41 to 57%, with 5-16% early complication and reoperation rates also reported. We believe that poor surgical outcomes for discogenic LBP are largely due to difficulties in reliably and accurately diagnosing the specific spinal discs that are causing pain.
As a result, the success rates of surgical care for LBP ranges from 41% to 57%, with 5-16% early complication and reoperation rates also reported. 3 We believe that poor surgical outcomes for discogenic LBP are largely due to difficulties in reliably and accurately diagnosing the specific spinal discs that are causing pain.
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.
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.
We also do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees. Our MR data post-processing products currently depend on compatible use with only a limited number of MR scanners that are provided only by one manufacturer of MR devices.
We also do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees. 33 Our MR data post-processing products currently depend on compatible use with only a limited number of MR scanners that are provided only by one manufacturer of MR devices.
Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, relating to technology that we license from or license to third parties, including by way of our license from the Board of Regents of the University of California, and we are therefore reliant on our licensors or licensees.
Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, relating to technology that we license from or license to third parties, including by way of our license from the Regents of the University of California, and we are therefore reliant on our licensors or licensees.
Trade secret violations are often a matter of state law, and the criteria for protection of trade secrets can vary among different jurisdictions. In addition, the laws of many foreign countries will not protect our intellectual property or other proprietary rights to the same extent as the laws of the United States.
Trade secret violations are often a matter of state law, and the criteria for protection of trade secrets vary among different jurisdictions. In addition, the laws of many foreign countries will not protect our intellectual property or other proprietary rights to the same extent as the laws of the United States.
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.
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, and Europe.
For example, we may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our products, or could face third-party claims of intellectual property infringement, misappropriation or other violations, including by a licensor from whom we’ve licensed certain intellectual property.
For example, we may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our products, or could face third-party claims of intellectual property infringement, misappropriation or other violations, including by a licensor from whom we have licensed certain intellectual property.
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).
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 31, 2028).
Failure to comply may result in FDA placing a temporary or permanent clinical hold on the study, issuance of warning letters, or other regulatory actions. From time to time, we engage consultants to help design, monitor and analyze the results of certain clinical studies and trials that we sponsor.
Failure to comply may result in FDA placing a temporary or permanent clinical hold on the study, issuance of warning letters, or other regulatory actions. 44 From time to time, we engage consultants to help design, monitor and analyze the results of certain clinical studies and trials that we sponsor.
If this trend continues or worsens, our customers may discontinue using our products and potential additional customers may opt against purchasing our products due to the cost or inability to procure insurance coverage. 67 The failure of third parties to meet their contractual, regulatory and other obligations could adversely affect our business.
If this trend continues or worsens, our customers may discontinue using our products and potential additional customers may opt against purchasing our products due to the cost or inability to procure insurance coverage. The failure of third parties to meet their contractual, regulatory and other obligations could adversely affect our business.
However, if we are not able to demonstrate Clinical Needs, nor that NOCISCAN is clinically effective, our revenue would be limited to a direct patient payment model, which will severely limit our ability to market our products and generate sufficient revenue to continue market our technology.
However, if we are not able to demonstrate Clinical Needs, nor that NOCISCAN is clinically effective, our revenue would be limited to a direct patient payment model, which will severely limit our ability to market our products and generate sufficient revenue to continue marketing our technology.
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.
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.
We seek to protect our technology and any potential future technology related to our NOCISCAN platform through a variety of methods, including seeking and maintaining patents intended to cover current and future technology, their methods of use and processes, and any other inventions that are commercially important to the development of our business.
We seek to protect our technology and potential future technology related to our NOCISCAN platform through a variety of methods, including seeking and maintaining patents intended to cover current and future technology, their methods of use and processes, and other inventions that are commercially important to the development of our business.
Accordingly, we believe that our current products do not require FDA clearance or approval under either 510(k) or PMA approval pathways. However, there can be no assurance that in the future, the FDA will not determine that PMA approval, de novo classification, or 510(k) clearance is required for our products.
Accordingly, we believe that our current products do not require FDA clearance or approval under the 510(k), De Novo, or PMA approval pathways. However, there can be no assurance that in the future, the FDA will not determine that PMA approval, De Novo classification, or 510(k) clearance is required for our products.
If we initiate a correction or removal of certain of our products from the market to reduce a risk to health posed by the device, we would be required to submit a Correction and Removal report to the FDA and, in many cases, similar reports to other regulatory agencies.
If we initiate a correction or removal of certain of our products from the market to reduce a risk to health posed by the device, we would likely be required to submit a Correction and Removal report to the FDA and, in many cases, similar reports to other regulatory agencies.
Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could affect our ability to expand to foreign markets or require costly efforts to protect our products. We also license rights to use certain proprietary information and technology from third parties.
Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could affect our ability to expand to foreign markets or require costly efforts to protect our products. 63 We also license rights to use certain proprietary information and technology from third parties.
All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time, may require us to modify our data processing practices and policies, divert resources from other initiatives and projects, and could restrict the way products and services involving data are offered, all of which may harm our business, financial condition and results of operations. 48 In the event we expand our operations internationally, we may become subject to additional foreign data privacy and security laws, rules, regulations, requirements, and standards, which in the European Union, for instance, have been significantly reformed.
All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time, may require us to modify our data processing practices and policies, divert resources from other initiatives and projects, and could restrict the way products and services involving data are offered, all of which may harm our business, financial condition and results of operations. 46 In the event we expand our operations internationally, we may become subject to additional foreign data privacy and security laws, rules, regulations, requirements, and standards, which in the European Union, for instance, have been significantly reformed.
If patients choose not to consent to the collection of their health information as a result of these concerns, or our customers who transfer patient data to us via the use of our products refuse to do so due to concerns for data privacy or potential related liabilities, or our consent or data privacy protection and management policies or practices are found to be unlawful, this could negatively impact the growth potential for our business. 52 We have encountered potential customers in the EU who have been reluctant, and indeed refused, to become customers due to concerns about transferring of any private patient information from their practice in the EU into the United States.
If patients choose not to consent to the collection of their health information as a result of these concerns, or our customers who transfer patient data to us via the use of our products refuse to do so due to concerns for data privacy or potential related liabilities, or our consent or data privacy protection and management policies or practices are found to be unlawful, this could negatively impact the growth potential for our business. 50 We have encountered potential customers in the EU who have been reluctant, and indeed refused, to become customers due to concerns about transferring of any private patient information from their practice in the EU into the United States.
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.
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.
By providing physicians information about whether a disc has the chemical and structural makeup consistent with pain or not, we believe the treatment plan for each patient will lead to more efficient and targeted care that, will in turn, result in lower costs and healthier patient outcomes. 6 Aclarion has taken the first steps to demonstrate the potential use of our technology in helping to improve the outcome of surgical intervention for discogenic low back pain patients by publishing a clinical study in the European Spine Journal in April 2019.
By providing physicians information about whether a disc has the chemical and structural makeup consistent with pain or not, we believe the treatment plan for each patient will lead to more efficient and targeted care that, will in turn, result in lower costs and healthier patient outcomes. 1 Aclarion has taken the first steps to demonstrate the potential use of our technology in helping to improve the outcome of surgical intervention for discogenic low back pain patients by publishing a clinical study in the European Spine Journal in April 2019.
However, there can be no assurance that the Category III codes will be converted and replaced with corresponding Level I Codes, and if there is a delay in the conversion of the Codes to Level 1 or there is ultimately no conversion of Codes to Level I, our business will be materially adversely affected.
However, there can be no assurance that the Category III codes will be converted and replaced with corresponding Level I Codes, and if there is a delay in the conversion of the Codes to Level I or there is ultimately no conversion of Codes to Level I, our business will be materially adversely affected.
Any new federal and state healthcare initiatives that may be adopted could limit the amounts that federal and state governments will pay for healthcare products and services, and could harm our business, financial condition and results of operations. 47 Our collection, use, storage, disclosure, transfer and other processing of sensitive and personal information could give rise to significant costs, liabilities and other risks, including as a result of investigations, inquiries, litigation, fines, legislative and regulatory action and negative press about our privacy and data protection practices, which may harm our business, financial conditions, results of operations and prospects.
Any new federal and state healthcare initiatives that may be adopted could limit the amounts that federal and state governments will pay for healthcare products and services, and could harm our business, financial condition and results of operations. 45 Our collection, use, storage, disclosure, transfer and other processing of sensitive and personal information could give rise to significant costs, liabilities and other risks, including as a result of investigations, inquiries, litigation, fines, legislative and regulatory action and negative press about our privacy and data protection practices, which may harm our business, financial conditions, results of operations and prospects.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, or comparable foreign regulations; · challenges enforcing our contractual and intellectual property rights as well as intellectual property theft or compulsory licensing, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; and · business interruptions resulting from geopolitical actions, including war and terrorism. 41 These and other risks associated with international operations may harm our ability to attain or maintain profitable operations internationally, which would harm our growth potential.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, or comparable foreign regulations; · challenges enforcing our contractual and intellectual property rights as well as intellectual property theft or compulsory licensing, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; and · business interruptions resulting from geopolitical actions, including war and terrorism. 39 These and other risks associated with international operations may harm our ability to attain or maintain profitable operations internationally, which would harm our growth potential.
In addition, if our practices are not consistent, or viewed as not consistent, with applicable legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may also become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, criminal or civil sanctions, all of which may harm our business, financial condition and results of operations. 49 Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could harm our business, financial condition and results of operations.
In addition, if our practices are not consistent, or viewed as not consistent, with applicable legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may also become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, criminal or civil sanctions, all of which may harm our business, financial condition and results of operations. 47 Our employees, independent contractors, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could harm our business, financial condition and results of operations.
Such a loss of patent protection would harm our sales, business, financial condition, and results of operations. 56 The medical device industry is characterized by patent litigation and in the future we could become subject to actual or threatened patent or other intellectual property litigation alleging our products or services infringe or misappropriate third party rights, which could be costly to address and defend, result in the diversion of management’s time and efforts, require us to pay damages, or prevent us from making, using, or selling our existing or future products.
Such a loss of patent protection would harm our sales, business, financial condition, and results of operations. 54 The medical device industry is characterized by patent litigation and in the future we could become subject to actual or threatened patent or other intellectual property litigation alleging our products or services infringe or misappropriate third party rights, which could be costly to address and defend, result in the diversion of management’s time and efforts, require us to pay damages, or prevent us from making, using, or selling our existing or future products.
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.
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.
These risks apply to our existing license from the Regents of the University of California, both in relation to patent rights we co-own with them as a result of joint invention between our and their respective inventors, and in relation to co-existent license rights that we share with another third-party company in some of those patent rights, as further summarized above. 61 Litigation may be necessary to defend against these and other claims challenging inventorship of our patents, trade secrets or other intellectual property.
These risks apply to our existing license from the Regents of the University of California, both in relation to patent rights we co-own with them as a result of joint invention between our and their respective inventors, and in relation to co-existent license rights that we share with another third-party company in some of those patent rights, as further summarized above. 59 Litigation may be necessary to defend against these and other claims challenging inventorship of our patents, trade secrets or other intellectual property.
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.
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.
If we are deemed to not comply with requirements governing the industry’s relationships with physicians or there is an investigation into our compliance by the Office of the Inspector General, the Department of Justice, states’ attorney generals or other government agencies, it could harm our sales, business, financial condition, and results of operations. 43 Regulatory compliance is expensive, complex and uncertain, and a failure to comply could lead to enforcement actions against us and other negative consequences for our business.
If we are deemed to not comply with requirements governing the industry’s relationships with physicians or there is an investigation into our compliance by the Office of the Inspector General, the Department of Justice, states’ attorney generals or other government agencies, it could harm our sales, business, financial condition, and results of operations. 41 Regulatory compliance is expensive, complex and uncertain, and a failure to comply could lead to enforcement actions against us and other negative consequences for our business.
Additionally, we cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties. 53 The patent prosecution process is expensive, time-consuming and complex and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patents or patent applications at a reasonable cost or in a timely manner.
Additionally, we cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties. 51 The patent prosecution process is expensive, time-consuming and complex and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patents or patent applications at a reasonable cost or in a timely manner.
Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we could continue incurring costs without being certain that we were the first to file any patent application related to our products or the first to invent any of the inventions claimed in our patents or patent applications. 60 The America Invents Act also includes a number of significant changes that affect the way patent applications are prosecuted and also may affect patent litigation.
Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we could continue incurring costs without being certain that we were the first to file any patent application related to our products or the first to invent any of the inventions claimed in our patents or patent applications. 58 The America Invents Act also includes a number of significant changes that affect the way patent applications are prosecuted and also may affect patent litigation.
FDA regulations and regulations of similar agencies are wide-ranging and include, among other things, oversight of: · product design, development, manufacturing (including suppliers) and testing; · laboratory, preclinical and clinical studies; · product safety and effectiveness; · product labeling; · product storage and shipping; · quality assurance policies, practices, and record keeping; · pre-market clearance or approval; · marketing, advertising and promotion; · product sales and distribution; · product changes; · product recalls; and · post-market surveillance and reporting of deaths, serious injuries, certain malfunctions, and related corrective actions.
FDA regulations and regulations of similar agencies are wide-ranging and include, among other things, oversight of: · product design, development, manufacturing (including suppliers) and testing; · laboratory, preclinical and clinical studies; · product safety and effectiveness; · product labeling; · quality assurance policies, practices, and record keeping; · pre-market clearance or approval; · marketing, advertising and promotion; · product sales and distribution; · product changes; · product recalls; and · post-market surveillance and reporting of deaths, serious injuries, certain malfunctions, and related corrective actions.
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.
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.
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.
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. 17 Government Regulation United States FDA.
Uncertainties resulting from the initiation and continuation of litigation or other intellectual property related proceedings could harm our business, financial condition and results of operations. 57 Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Uncertainties resulting from the initiation and continuation of litigation or other intellectual property related proceedings could harm our business, financial condition and results of operations. 55 Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. 32 Risks related to our Nasdaq listing We may not be able to maintain compliance with the continued listing rules of the Nasdaq Capital Market and a delisting could limit the liquidity of our stock, increase its volatility and hinder our ability to raise capital.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. 31 Risks Related To Our Nasdaq Listing We may not be able to maintain compliance with the continued listing rules of the Nasdaq Capital Market and a delisting could limit the liquidity of our stock, increase its volatility and hinder our ability to raise capital.
Also included in the scope of the regulation are devices designed for the purpose of “prediction and prognosis” of a disease or other health condition; · Device manufacturers will be required to identify at least one person within their organization who is ultimately responsible for all aspects of compliance with the requirements of the new MDR.
Also included in the scope of the regulation are devices designed for the purpose of “prediction and prognosis” of a disease or other health condition; · Device manufacturers are required to identify at least one person within their organization who is ultimately responsible for all aspects of compliance with the requirements of the new MDR.
If these organizations or authorities name us as having breached our obligations under their regulations, rules or standards, our reputation would suffer and our business and financial condition could be adversely affected. Other Foreign Healthcare Regulations We are also subject to regulation in the foreign countries in which we manufacture and market our products.
If these organizations or authorities name us as having breached our obligations under their regulations, rules or standards, our reputation would suffer and our business and financial condition could be adversely affected. Other Foreign Healthcare Regulations We are also subject to regulation in the foreign countries in which we distribute and market our products.
Our fourth patent family relates to inventions for other novel diagnostic systems and methods that represent potential future pipeline products, or otherwise provide potential exclusionary rights against related potential competitive threats. This includes patents related to discogenic pain diagnosis using molecular imaging and/or gene expression testing.
Our fourth patent group relates to inventions for other novel diagnostic systems and methods that represent potential future pipeline products, or otherwise provide potential exclusionary rights against related potential competitive threats. This includes patents related to discogenic pain diagnosis using molecular imaging and/or gene expression testing.
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.
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. 57 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 are unable to engage or receive CE mark approval from a Notified Body under the MDR by the May 2024 grace period deadline, or are determined to be non-compliant with MDR regulations not subject to the grace period and therefore applicable to us as of May 2021, we could lose our CE mark, and may become unable to continue promoting or selling our products for commercial use in the EU, UK, or other countries that relate their medical device regulations to a CE mark.
If we are unable to engage or receive CE mark approval from a Notified Body under the MDR by the December 2028 grace period deadline, or are determined to be non-compliant with MDR regulations not subject to the grace period and therefore applicable to us as of May 2021, we could lose our CE mark, and may become unable to continue promoting or selling our products for commercial use in the EU, UK, or other countries that relate their medical device regulations to a CE mark.
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. 55 We may not be successful in obtaining or maintaining necessary rights to any products or processes we may have or develop through acquisitions and in-licenses.
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. 53 We may not be successful in obtaining or maintaining necessary rights to any products or processes we may have or develop through acquisitions and in-licenses.
This compared to 54% of surgical patients achieving clinically significant improvement when discs identified as painful by NOCISCAN were omitted from the surgical treatment, or discs identified as not painful by NOCISCAN were included in the treatment. Some authors of this study had a financial relationship with Aclarion, who sponsored the study.
This compares to 54% of surgical patients achieving clinically significant improvement when discs identified as painful by NOCISCAN were omitted from the surgical treatment, or discs identified as not painful by NOCISCAN were included in the treatment. Some authors of this study had a financial relationship with Aclarion, who sponsored the study.
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 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.
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.
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. 52 Patents have a limited lifespan.
To be substantially equivalent, the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence.
To be substantially equivalent, the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics that do not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence.
The Company is capturing in databases both the raw spectroscopy data and the post-processed spectral data from every Nociscan completed in order to utilize this data as future training data to teach a machine learning algorithms to associate MRS data with clinical outcomes.
The Company is capturing in databases both the raw spectroscopy data and the post-processed spectral data from every Nociscan completed in order to utilize this data as future training data to teach a machine learning algorithm to associate MRS data with clinical outcomes.
Class I devices are those for which safety and effectiveness can be reasonably assured by adherence to a set of regulations, referred to as General Controls, which require compliance with the applicable portions of the FDA’s Quality System Regulation (QSR) facility registration and product listing, reporting of adverse events and malfunctions and appropriate, truthful and non-misleading labeling, advertising and promotional materials.
Class I devices are those for which safety and effectiveness can be reasonably assured by adherence to a set of regulations, referred to as General Controls, which require compliance with the applicable portions of the FDA’s Quality Management System Regulation (QMSR) facility registration and product listing, reporting of adverse events and malfunctions and appropriate, truthful and non-misleading labeling, advertising and promotional materials.
We plan to support conversion of codes from Category III to Category I by advancing multiple clinical studies and related peer-reviewed clinical publications intended to further support improved patient outcomes (such as success rates following DLBP surgeries), and various economic advantages to be achieved by incorporating the use of our NOCISCAN platform into the DLBP patient’s healthcare journey.
We plan to support the conversion of codes from Category III to Category I by the outcomes from our CLARITY Trial and advancing multiple other clinical studies and related peer-reviewed clinical publications intended to further support improved patient outcomes (such as success rates following DLBP surgeries), and various economic advantages to be achieved by incorporating the use of our NOCISCAN platform into the DLBP patient’s healthcare journey.
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 results could limit adoption of our technology, which would harm our sales, business, financial condition, and results of operations. 36 We expect to increase the size of our organization in the future, and we may experience difficulties in managing this growth.
Further, even if the Codes are converted to Level 1, there can be no assurance that we will be successful in increasing the use of our technology by patients and health care professionals.
Further, even if the Codes are converted to Level I, there can be no assurance that we will be successful in increasing the use of our technology by patients and health care professionals.
We are increasingly dependent on complex information technology systems for the efficient functioning of our business, including the manufacture, distribution and maintenance of our products, as well as for accounting, data storage, compliance, purchasing and inventory management purposes.
We are increasingly dependent on complex information technology systems for the efficient functioning of our business, including the manufacture, distribution and maintenance of our products, as well as for accounting, data storage, compliance, and purchasing purposes.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
As of December 31, 2025, there were approximately 213 holders of record of our common stock and one 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.
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]
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]
Added
The shares were issued pursuant to the Company’s Form 1-A Offering Statement qualified on June 24, 2024. During the year ended December 31, 2025, all sales of unregistered securities by the Company have been previously reported on a Form 8-K or Form 10-Q.

Item 7. Management's Discussion & Analysis

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

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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.
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. 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.
Revenue Recognition The Company derives its revenues from one source, the delivery of Nociscan reports to medical professionals. Revenues are recognized when a contract with a customer exists, and the control of the promised services are transferred to our customers. The amount of revenue recognized reflects the consideration we expect to receive in exchange for those services.
Revenue Recognition The Company derives its revenues from one source, the delivery of Nociscan reports to medical professionals. Revenues are recognized when a contract with a customer exists, and the control of the promised services are transferred to our customers. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those services.
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.
Accordingly, our financial statements may not be comparable to other public companies that do not elect the extended transition period. 84 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.
Substantially all our revenues are generated from contracts with customers in the United States.
Substantially all of our revenues are generated from contracts with customers in the United Kingdom and the United States.
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.
As of December 31, 2025, we had an accumulated deficit of $58,495,940. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful commercialization and continued development of our SaaS platform.
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.
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, 2025, we had cash and cash equivalents and restricted cash of $12,040,789.
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”).
Contractual Obligations And Commitments The Company does not have any contractual obligations, not otherwise on our balance sheet as of December 31, 2025. 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”).
If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the commercialization or further development of our SaaS platform.
If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back, or discontinue the commercialization or further development of our SaaS platform. 76 Corporate Information The Company currently operates as a Delaware corporation, under the name Aclarion, Inc.
Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Form 10-K, particularly in the section entitled “Risk Factors.” Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer to Aclarion, Inc.
Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Form 10-K, particularly in the section entitled “Risk Factors.” Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer to Aclarion, Inc. 75 Overview Aclarion is a healthcare technology company that leverages Magnetic Resonance Spectroscopy (“MRS”), proprietary signal processing techniques, biomarkers, and augmented intelligence algorithms to optimize clinical treatments.
Through a cloud connection, Nociscan receives magnetic resonance spectroscopy (MRS) data from an MRI machine for each lumbar disc being evaluated. In the cloud, proprietary signal processing techniques extract and quantify chemical biomarkers demonstrated to be associated with disc pain. Biomarker data is entered into proprietary algorithms to indicate if a disc may be a source of pain.
In the cloud, proprietary signal processing techniques extract and quantify chemical biomarkers demonstrated to be associated with disc pain. Biomarker data is entered into proprietary algorithms to indicate if a disc may be a source of pain.
The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options. The Company records expense for forfeitures in the periods they occur. Until our April 2022 IPO, we were a private company with no active public market for our common equity.
The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options. The Company records expense for forfeitures in the periods they occur.
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.
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.
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.
Subsequent to December 31, 2025, the Company raised additional capital through a registered direct offering (refer to Note 16 – Subsequent Events to our financial statements). We believe our current cash and cash equivalents and restricted cash will fund our operating expenses and capital expenditure requirements through the first quarter of 2028.
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.
During the year ended December 31, 2024, net cash provided by financing activities was $4,900,996 which included gross proceeds of $1,754,032 from our equity line, $2,691,391 from a February 27, 2024 public offering, $1,000,000 from sales of C-series preferred stock and warrants, and $529,254 from common stock and warrant RegA+ offering.
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.
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 and convert them into Category I CPT codes.
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.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2025 2024 Net cash used in operating activities $ (7,164,204 ) $ (5,271,609 ) Net cash used in investing activities (203,902 ) (321,937 ) Net cash provided by financing activities 18,945,234 5,026,138 Net increase (decrease) in cash and cash equivalents $ 11,577,128 $ (567,408 ) Operating Activities During the year ended December 31, 2025, the Company used $7,164,204 in cash for operating activities, representing an increase in cash use of $1,892,595, compared to $5,271,609 used during the same period in 2024.
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).
During the year ended December 31, 2025, the Company raised aggregate gross proceeds of $22,566,911 through a combination of financing transactions, including a registered direct public offering of units totaling $14,554,545 consisting of common shares, Series A warrants, and Series B warrants; two registered direct offerings of common stock totaling $5,702,968; a registered direct offering of pre-funded warrants totaling $1,972,957; and the exercise of Series C Preferred warrants totaling $336,441.
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%).
The Company reported a net loss of $7,233,629 for the year ended December 31, 2025, compared to a net loss of $6,992,927 for the year ended December 31, 2024, representing an increase in net loss of $240,702 or 3.4%.
To the extent that we raise additional capital through the sale of equity securities, current stockholders’ ownership interests may be diluted.
Accordingly, we may need to obtain substantial additional funds to achieve our business objectives. Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity securities, current stockholders’ ownership interests may be diluted.
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 our current cash will fund our operating expenses and capital expenditure requirements into the first quarter of 2028. Management is actively managing the cash position.
Overview Aclarion is a healthcare technology company that leverages Magnetic Resonance Spectroscopy (“MRS”), proprietary signal processing techniques, biomarkers, and augmented intelligence algorithms to optimize clinical treatments. The Company is first addressing the chronic low back pain market with Nociscan, the first, evidence-supported, SaaS platform to noninvasively help physicians distinguish between painful and nonpainful discs in the lumbar spine.
The Company is first addressing the chronic low back pain market with Nociscan, the first, evidence-supported, SaaS platform to noninvasively help physicians distinguish between painful and nonpainful discs in the lumbar spine. Through a cloud connection, Nociscan receives magnetic resonance spectroscopy (MRS) data from an MRI machine for each lumbar disc being evaluated.
As a result, we may need substantial additional funding to support our continuing operations and pursue our growth strategy.
We believe that with favorable payer coverage, the Company has the opportunity to more efficiently engage physicians and imaging centers that will adopt our technology. As a result, we may need substantial additional funding to support our continuing operations and pursue our growth strategy.
Year 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.
Year Ended December 31, 2025 2024 $ Change Revenue : Revenue $ 75,730 $ 45,724 $ 30,006 Cost of revenue 68,902 84,658 (15,756 ) Gross profit (loss) 6,828 (38,934 ) 45,762 Operating expenses : Sales and marketing 1,900,598 976,554 924,044 Research and development 1,033,789 888,766 145,023 General and administrative 4,124,832 3,608,793 516,039 Total operating expenses 7,059,219 5,474,113 1,585,106 Loss from operations (7,052,391 ) (5,513,047 ) (1,539,344 ) Other income (expense): Interest expense – (535,470 ) 535,470 Loss on exchange of debt – (1,073,317 ) 1,073,317 Gain on extinguishment of debt 73,272 6,058 67,214 Changes in fair value of warrant and derivative liabilities 11,806 335,033 (323,227 ) Penalties and settlements (672,625 ) (212,453 ) (460,172 ) Interest income 411,061 318 410,743 Other, net (4,752 ) (49 ) (4,703 ) Total other expense (181,238 ) (1,479,880 ) 1,298,642 Loss before income taxes $ (7,233,629 ) $ (6,992,927 ) $ (240,702 ) Income tax provision – – – Net loss $ (7,233,629 ) $ (6,992,927 ) $ (240,702 ) Dividends on preferred stock $ (6,683 ) $ (59,675 ) $ 52,992 Net loss allocable to common stockholders $ (7,240,312 ) $ (7,052,602 ) $ (187,710 ) Net loss per share allocable to common shareholders $ (13.61 ) $ (7,478.90 ) $ 7,465.29 Weighted average shares of common stock outstanding, basic and diluted 532,036 943 531,093 77 Years ended December 31, 2025, and 2024 Total revenues.
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 .
This transaction also accelerated the recognition of the related note discounts and resulted in a charge $111,928 for the year ended December 31, 2024. This charge was offset by a gain on settlement of debt of $117,985, resulting in a net gain on extinguishment of debt of $6,058 for the year ended December 31, 2024.
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.
This transaction accelerated the recognition of the related note discounts, resulting in a loss on exchange of debt of $1,073,317 for the year ended December 31,2024, compared to $0 for the year ended December 31, 2025. The second transaction occurred on March 6, 2024, when the Company repaid $300,974 of principal and accrued interest on the notes.
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.
Cash issuance costs related to all financing activities totaled $772,707. The Company used cash in the year 2024 to retire $300,973 of outstanding promissory debt. Funding Requirements Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate meaningful revenues.
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.
We expect research and development expenses to continue to increase as we continue the development of the Nociscan 3.0 product. 78 General and Administrative . General and administrative expenses were $4,124,832 for the year ended December 31, 2025, compared to $3,608,793 for the year ended December 31, 2024, representing an increase of $516,039 or 14.3%.
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.
For the year ended December 31, 2025, the Company recorded a favorable fair value adjustment of $11,806, compared to a favorable adjustment of $335,033 for the year ended December 31, 2024, representing a decrease in favorable adjustment of $323,227. The derivative liability was fully retired in 2024 in connection with the settlement of all unsecured non-convertible notes.
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.
Results of Operations Operating activities: The following table summarizes our results of operations for the twelve months ended December 31, 2025, and 2024.
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.
Interest expense was $0 for the year ended December 31, 2025, compared to $535,470 for the year ended December 31, 2024. The decrease in interest expense was attributable to the retirement of all unsecured non-convertible notes in 2024. Loss On Exchange Of Debt and Gain On Extinguishment Of Debt.
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%.
We expect this increase in revenue to continue as we bring on more insurance payors, and our scan volumes increase. Cost of Revenue . Cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, partner fees (Radnet), and credit card fees.
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%.
Sales and marketing expenses primarily consist of post-clearance clinical services related to the CLARITY Trial, product marketing consulting, travel and entertainment costs, and salaries and benefits. Sales and marketing expenses totaled $1,900,598 for the year ended December 31, 2025, compared to $976,554 for the year ended December 31, 2024, representing an increase of $924,044 or 94.6%.
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.
Total revenues for the year ended December 31, 2025, were $75,730, which was an increase of $30,006 or 65.6%, from $45,724 for the year ended December 31, 2024. This increase in revenue was driven primarily by the growing volume of NOCISCAN® reports sold into the UK market following recent local coverage decisions.
Removed
Corporate Information We were formed under the name Nocimed, LLC, a limited liability company in January 2008, under the laws of the State of Delaware. In February 2015, Nocimed, LLC was converted into Nocimed, Inc., a Delaware corporation. On December 3, 2021, we changed our name to Aclarion, Inc.
Added
Total cost of revenue was $68,902 for the year ended December 31, 2025, compared to $84,658 for the year ended December 31, 2024, a decrease of $15,756 or 18.6%. This decrease was primarily due to a reduced allocation of hosting fees to cost of revenue and a change in revenue mix that reduced partner fees. Sales and Marketing .
Removed
Our principal executive offices are located at 8181 Arista Place, Suite 100, Broomfield, Colorado 80021. Our main telephone number is (833) 275-2266. Our internet website is www.aclarion.com.
Added
The increase in sales and marketing expenses was primarily driven by higher post-clearance clinical services, which was $606,838 for the year ended December 31, 2025, compared to $300,794 for the same period in 2024, an increase of $306,044, reflecting costs associated with the initiation of the CLARITY Trial, for which the first patient enrolled in June 2025.
Removed
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.
Added
With continued enrollment in the CLARITY Trial in 2026, we expect these expenses continue to increase. Product marketing consulting expenses increased by $277,410, to $362,640 for the year ended December 31, 2025, compared to $85,230 for the same period in 2024, reflecting expanded use of external marketing consultants.
Removed
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.
Added
Salaries and benefits increased by $218,569 to $542,515 for the year ended December 31, 2025, compared to $323,946 for the same period in 2024, primarily due to accruals for incentive-based performance payouts and hiring of additional sales and marketing personnel in the United States and the United Kingdom.
Removed
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 .
Added
We expect salaries and benefits continue to increase as a result of planned hiring within our sales and marketing function. Travel and entertainment expenses increased by $104,997 to $228,834 for the year ended December 31, 2025, compared to $123,837 for the year ended December 31, 2024, primarily related to activities supporting local coverage determinations in the United Kingdom.
Removed
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.
Added
Research and Development . Research and development expenses increased by $145,023, or 16.3%, to $1,033,789 for the year ended December 31, 2025, compared to $888,766 for the year ended December 31, 2024.
Removed
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.
Added
The increase was primarily attributable to higher patent maintenance fees, which totaled $52,141 for the year ended December 31, 2025, compared to $0 for the same period in 2024, reflecting the Company’s efforts to advance protection of its intellectual property portfolio.
Removed
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.
Added
In addition, bonus expense increased by $58,013 to $85,771 for the year ended December 31, 2025, compared to $27,758 in 2024, due to accruals for incentive-based performance payouts.
Removed
Changes in Fair Value of Warrant and Derivative Liabilities.
Added
Quality system and regulatory consulting expenses increased by $36,964 to $210,032 for the year ended December 31, 2025, compared to $173,068 for the same period in 2024, primarily as a result of expanded regulatory compliance and documentation activities.
Removed
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 .
Added
The increase was primarily driven by higher accruals under the Company’s 2025 incentive bonus program, which totaled $357,902 for the year ended December 31, 2025, compared to $216,409 in 2024, an increase of $141,493, due to incentive-based performance payout accruals.
Removed
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.
Added
In addition, insurance expenses, primarily related to directors and officers (“D&O”) coverage, increased to $372,588 for the year ended December 31, 2025, from $289,798 in the prior-year period, an increase of $82,790, reflecting expanded policy coverage and higher renewal premiums.
Removed
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 .
Added
The Company also incurred litigation and financial accounting advisory expenses of $100,534 and $383,793, respectively, for the year ended December 31, 2025, compared to $0 and $208,752, respectively, for the same period in 2024, representing increases of $100,534 and $175,041, respectively.
Removed
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).
Added
These increases were partially offset by a decrease of $118,182 in stock-based compensation expense, which totaled $105,368 for the year ended December 31, 2025, compared to $223,550 in 2024, primarily attributable to stock options that vested in the prior year. Interest Expense .
Removed
Therefore, we had periodically determined the overall value of our company and the estimated per share fair value of our common equity at their various dates using contemporaneous valuations performed in accordance with the guidance outlined in the American Institute of CPA’s Practice Aid.
Added
During the year ended December 31, 2024, the Company incurred losses on two transactions undertaken to reduce outstanding debt.
Removed
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.
Added
The first transaction occurred between January 22 and January 29, 2024, when the Company entered into a series of exchange agreements with investors to issue an aggregate of 644,142 shares of common stock (71 shares as adjusted for 2025 Stock Splits) in exchange for $1,519,779 of principal and accrued interest on outstanding notes.
Removed
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.
Added
In contrast, the Company recognized a gain of $73,272 for the year ended December 31, 2025, representing an increase in gain of $67,214, related to the retirement of an obligation associated with commitment shares. Changes in Fair Value of Warrant and Derivative Liabilities . The Company’s warrant and derivative liabilities are measured at fair value at each reporting date.
Removed
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.
Added
Penalties and Settlements . In March 2025, the Company paid $687,500 to settle a dispute under the "fee tail" provision of a previously executed investment banking agreement.
Removed
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
This payment was partially offset by a $14,875 favorable accounts payable settlement, resulting in penalties and settlements expense of $672,625 for the year ended December 31, 2025, compared to $212,453 for the year ended December 31, 2024, representing an increase of $460,172. 79 Interest Income .
Removed
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.
Added
Interest income was $411,061 for the year ended December 31, 2025, primarily reflecting interest income earned on money market deposits following the Company’s fundraising activities during 2025, compared to $318 for the year ended December 31, 2024, representing an increase of $410,743. Net Loss .
Removed
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.
Added
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. 80 As of December 31, 2025, we had cash and cash equivalents of $12,040,789, including $25,000 of restricted cash.
Removed
During the year ended December 31, 2023, net cash provided by financing activities was $3,314,732, which included $2,250,000 of proceeds from unsecured non-convertible note financings, $1,462,949 of proceeds from an equity line, and $398,217 of cash issuance costs related to both the equity line and debt.
Added
Subsequent to December 31, 2025, the Company completed a registered direct public offering of (i) 200,000 shares of the Company’s common stock, and (ii) pre-funded warrants (the “Pre-funded Warrants”) to purchase up to 1,800,000 shares of common stock, at an offering price of $5.18 per share.
Removed
Funding requirements Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate meaningful revenues. Accordingly, we may need to obtain substantial additional funds to achieve our business objectives. Adequate additional funds may not be available to us on acceptable terms, or at all.
Added
The purchase price of each Pre-funded Warrant was $5.17999, which represents the offering price per share of common stock, minus the exercise price of $.00001 per share. The Pre-funded Warrants are immediately exercisable.
Removed
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.
Added
The aggregate gross proceeds to the Company from this offering were approximately $10.4 million, before deducting placement agent fees of 6% of the aggregate gross proceeds and other offering expenses payable by the Company. See Note 16 – Subsequent Events to our financial statements for more information.
Removed
Accordingly, our financial statements may not be comparable to other public companies that do not elect the extended transition period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.
Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. 85
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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Interest rate sensitivity We had cash and cash equivalents and restricted cash totaling $12,040,789 as of December 31, 2025. These amounts are invested primarily in demand deposit accounts and money market funds.

Other ACON 10-K year-over-year comparisons