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Since scenario three wasmmTBI population. Given the outcomesmall number of published studies, the primary endpointsmall number of the study, the statistical analysis plan prospectively dictated that the secondary endpoint would be calculated by combining the two groups and comparing the response to baseline at week two and week five.  

Secondary effectiveness endpoints demonstrated statistically and clinically significant increases (at least 8 points) in composite SOT scores:

The primary safety endpoint was an improvementpatients enrolled in the frequencystudies of falls, as determined by daily event recording onwhich we are aware, the subject data case report form during the in-clinic phase of the study. The secondary safety endpoint was the frequency and severity of headaches, as measure by the Headache Disability Index at baseline and at the end of treatment, which was at week five.

PoNS Long-Term Treatment Study

This study was performed to understand the durability of treatment response. This double-blind randomized controlled study in patients with mild- to moderate- TBI was completed in May 2017 at the Tactile Communication Neurorehabilitation Laboratory at University of Wisconsin-Madison and was sponsored by the U.S. Army. The study was conducted with 22 patients using the HFP PoNS device and 21 patients using the LFP PoNS device with 14 weeks of active treatment followed by a 12-week washout period after which final SOT scores were captured.

Highlights of the study results were as follows:

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Conclusion:

With the completioneffectiveness and dosing parameters of our registrational clinical trial, we expect to complete the verification and validation for device design and manufacturing to meet the requirements of the applications for commercial distribution, and submit applications for marketing authorizationsusing supervised therapeutic exercise alone for the treatment of balance disorderdeficit following mmTBI. Consequently, we believe that there is a large potential commercial opportunity for the PoNS Therapy in mild-the treatment of balance deficit due to moderate-TBI, withmmTBI. Our goal is to establish the FDA, Health Canada, CE MarkPoNS Therapy as the standard of care for this condition all over the world.

Overview of Stroke in Europe and the Therapeutic Goods Administration in Australia during 2018.

Planned Studies

Multiple SclerosisCanada

According to the National Multiple Sclerosis Society, there are approximately one million individuals in the United States living with MS, for an annual economic costCanadian Chronic Disease Surveillance System of MS in the United States of approximately $28 billion, many of whom experience balance problems. Studies from several countries estimate that 50% to 70% of MS patients had reported falls within the past two to six months.

The FDA has determined that we must obtain an investigational device exemption, or IDE, prior to commencing any clinical trial of the PoNS Treatment in MS patients in the United States.  We intend to commence a registrational clinical trial of the PoNS Treatment in MS patients with balance and gait deficit in the second half of 2018, contingent on the availability of funding and the timing of our submission and approval of our IDE by the FDA.

Stroke

Canada, Stroke is the third leading cause of death in Canada and the United States,tenth largest contributor to disability-adjusted life years (the number of years lost due to ill-health, disability or early death). About 878,500 Canadian adults aged 20+ have experienced a stroke (2018-2019) and with approximately 795,000 annual episodes,the population aging, more and more Canadians are at risk. This condition often has a significant impact on the ability on one’s functionality, negatively affecting independence, employability, productivity, mental health and participation in the community. Rehabilitation is required following a stroke for resulting motor, cognitive and behavioral impairments. Most province public health systems in approximately 140,000 deaths.Canada offers stroke rehabilitation services along with private establishments. The term “stroke” or “brain attack” implies brain tissue has been destroyed – because onepotential for commercial opportunity for PoNS in order to support all these public and private establishments is wide. PoNS Therapy offers new opportunities for this type of service by enhancing physical rehabilitation and helping attain the desired goals.

PoNS Clinical Trials and Scientific Support in MS

There are two peer-reviewed published studies reporting on the results of clinical trials comparing active PoNS + PT vs a no frequency pulse sham device (placebo PoNS) + PT in subjects with mild and moderate MS: Tyler et al. Journal of NeuroEngineering and Rehabilitation 2014, 11:79 and Leonard et al. Multiple Sclerosis Journal Experimental, Translational and Clinical January-March 2017: 19 DOI: 10.1177/ 2055217317690561

Summary results of the vessels that provide oxygenTyler study in 20 subjects with mild and nutrientsmoderate MS:

Summary results from the brain has ruptured or become blocked by atheromatous plaque or a blood clot traveling from elsewhereLeonard study in 14 patients treated with mild and moderate MS:

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Summary of Real-World Evidence (RWE) in MS patients treated with PoNS in Canada.

PoNS Clinical Trials and Scientific Support in mmTBI

There are two peer-reviewed published studies reporting on the body, often due to an irregularly beating heart. Whichever mechanism leads to a stroke, the end result is the same; death of brain tissue and variable disability depending on what parts of the brain have been affected.  This might be the inability to feel or move a part of the body, to speak, think, or many other symptoms. Acute treatment consists of maneuvers including drugs, interventional radiology or surgery to stop bleeding or remove blockages. Thereafter, therapy is focused on trying to help the patient recover use of disabled anatomy with physical therapy or learn to overcome disability with occupational therapy. We are determining next steps for our studiesclinical trials’ results of the PoNS Therapy in people with mmTBI. The first is from our registrational clinical trial (TBI-001): Ptito A, Papa, L, Gregory, K, Folmer, RL, Walker, WC, Prabhakaran, V, Wardini, R, Skinner, KL, Yochelson, M, (2020). “A Prospective, Multicenter Study to Assess the Safety and Efficacy of Translingual Neurostimulation Plus Physical Therapy for the Treatment for stroke patients, which are subjectof a Chronic Balance Deficit Due to Mild-to-Moderate Traumatic Brain Injury”. Neuromodulation: Technology at the availability of funding.

Cognition

In December 2016, we announced, based on preliminary, encouraging results,Neural Interface. The second is from the expansion of our comprehensiveLong-Term Treatment study in healthy adults to measure the benefit of investigational PoNS Treatment on physiological improvements associated with cognition. The study was conducted at HealthTech Connex Inc, or HTC, in Surrey, BC. HTC also collaborated with us to explore whether a single, twenty-minute session of two PoNS stimulation waveforms - high frequency, or HF, and low frequency, or LF - impacted objective measures of brain activity recorded by high density 64-channel electroencephalography, or EEG, and whether there were differences between the two PoNS stimulation waveforms. The study in neurologically intact volunteers showed that:

These findings confirmed several important assumptions about the PoNS technology, most importantly, being that a single PoNS stimulation session has an impact on brain activity, and the results also provide insights on the differences between PoNS waveforms and potential opportunities for research that will continue to drive improved and more effective patient experiences and results.

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Further Studies

Given the likely mechanism of action of PoNS Treatment, we are exploring a range of other clinical applications including Parkinson’s Disease, cognitive disorders, the treatment of addiction, xerostomia and other neurological conditions. We will require additional funding, in the formchronic symptoms due to mild-to-moderate traumatic brain injury.” Archives of grants and partnerships with collaborators, to expand our clinical development.

Our Partnership with the U.S. Army

In July 2015, we entered into a sole source cost sharing agreement, or the U.S. Army Agreement, with the U.S. Army for the commercial development of the PoNS Treatment for chronic balance deficits related to mild- to moderate-TBI. Pursuant to the U.S. Army Agreement, the laboratories of the U.S. Army Medical Material Agency, or USAMMA, and the U.S. Army MedicalRehabilitation Research and Material Command, or USAMRMC, the “Army Laboratories,” agreedClinical Translation; 1(304):100026.

PoNS Registrational Clinical Trial in mmTBI

Both studies were double-blind randomized, controlled, aiming to cooperate with NHC, our wholly-owned subsidiary, on clinical studies and regulatory responsibilities necessary to obtain FDA marketing authorization for this indication.  Under the U.S. Army Agreement, NHC is the sole regulatory sponsor and will oversee and execute all required clinical studies. Further, the U.S. Army will reimburse NHC for the initially budgeted costs related to the registrational clinical trial ofassess the safety and effectiveness of the PoNS TreatmentTherapy using translingual noninvasive electric stimulation in conjunction with physical therapy performed in clinic for the first two weeks of treatment under supervision of a registered PoNS trainer, and, individually, at home over a short-term period of time (3 or 12 -weeks) for a total of 5- or 14-week therapy, respectively for the short- and long-term studies. Both trials enrolled chronic (> 1 year post head trauma event) TBI subjects with a balance deficits relateddeficit established as sensory organizational test (SOTT) composite score of at least 16 points below the normative value for the participant’s age, who have reached a plateau in their prior physical rehabilitation regimen outcome. According to published clinical trial data, balance impaired TBI subjects treated with physical therapy alone reached an average improvement of 10-13 points in their SOT composite score over a short-term treatment period, an improvement that trended back towards baseline values upon physical therapy discontinuation. In both PoNS studies, participants entered the trial with an average SOT composite score of 40 (1-100 range) indicative of compromised functional balance and were randomized to treatment with PoNS devices that delivered either a high-frequency pulse, or HFP, (25.7 million pulses per 20 minute treatment) or a low-frequency pulse, or LFP, (13,728 pulses per 20 minute treatment).

In both studies, the primary efficacy endpoint was constructed for a between-group (HFP-treated and LFP-treated cohorts) comparison based on a greater than 15-point SOT composite score improvement at endpoint. The statistical plans also provided for a key secondary efficacy endpoint that established the treatment response (> 15 points on SOT composite score) from baseline in the pooled HFP and LFP groups at endpoint(s), should the primary measure failed to establish a significant difference between the HFP and LFP treatment groups.

Summary results of the registrational study (Ptito et al. 2020) in mild to moderate TBI up to a maximum amountsubjects with balance deficit:

Table of $3.0 million. The U.S. Army Agreement terminates on December 31, 2018 unlessContents

Summary of the parties agree to extendresults of the term.

We previously entered into a collaborative relationship26-week long-term treatment study (2019) study in people with the U.S. Army, pursuant to a February 2013 cooperative research and development agreement as amended, or the CRADA, to determine ifmmTBI:

These studies demonstrated that the PoNS TreatmentTherapy could, be developedon average, allow people with mmTBI who had balance deficit reach, over 14 weeks of treatment, and maintain, over 12 week post-treatment, an SOT composite score within or above the normal range. Furthermore, in a subset of nine participants, who underwent sequential magnetic resonance imaging (MRI) scans, showed meaningful structural and functional changes in specific brain areas consistent with PoNS therapeutic effect on the balance function.

PoNS Clinical Evidence and Scientific Support in Stroke

Gait deficit treatment outcomes for commercialPoNS-treated individuals were analyzed through a real-world evidence (RWE) retrospective analysis of clinical data from 10 clinical rehabilitation settings in Canada sites. The RWE dataset consisted of 31 consecutive stroke patients that started treatment between March 2019 and November 2022. Patients included in this data set met the criteria for mild to moderate chronic stroke based on the rating of gait (walking) ability. Gait performance was determined using the FGA. FGA at Baseline and at Week 14, as well as changes form Baseline to Week 14 and FGA values at intermediate time points were summarized using means, standard deviations, medians, minimum and maximum values and where appropriate using 95% confidence intervals.

Summary of RWE database analysis in stroke patients treated with PoNS in Canada:

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Regulatory Status Worldwide

Canadian Regulatory Status: mmTBI and MS

On October 17, 2018, we received our Canadian marketing authorization from Health Canada allowing us to commercialize the PoNS device in Canada for use as a short-term treatment (14 weeks) of balance deficit due to mmTBI.

On March 18, 2020, we received marketing authorization from Health Canada allowing us to commercialize the PoNS device in Canada for the treatment of soldiersgait deficit in patients with mild and othersmoderate MS symptoms. Our market authorization application comprised objective statistical evidence as well as independently reviewed clinical research analysis. This label expansion expanded our addressable market in Canada to include a patient population seeking treatment options that may resolve or delay the progression of MS gait deficit symptoms.

On March 8, 2023, we received marketing authorization from Health Canada allowing us to commercialize the PoNS device in Canada for use as a short-term treatment of gait deficit due to mild and moderate symptoms from stroke. This expands our addressable market in Canada to include a patient population seeking treatment options that may resolve stroke gait deficit symptoms.

U.S. Regulatory Status: MS

On May 7, 2020, we received Breakthrough Designation for the PoNS device as a potential treatment for gait deficit due to symptoms of MS, to be used as an adjunct to a supervised therapeutic exercise program. The goal of the Breakthrough Devices Program is to provide patients and health care providers with timely access to these medical devices by speeding up their development, assessment, and review, while preserving the statutory standards for premarket approval, 510(k) clearance, and de novo classification and clearance, consistent with FDA’s mission to protect and promote public health.

The Breakthrough Devices Program offers manufacturers an opportunity to interact with the FDA to efficiently address topics as they arise during the premarket review phase, which can help manufacturers receive feedback from the FDA and identify areas of agreement in a varietytimely way. Manufacturers can also expect prioritized review of military-relevant neurological manifestationstheir submission.

Breakthrough Device Designation does not change the requirements for approval of TBI, including tinnitus, post-traumatic stress disorder, pain and any subsequent indications identified byan application for a marketing authorization.

On March 26, 2021, we received marketing authorization from the parties. Under the CRADA, NHC is the sole regulatory sponsorFDA of the PoNS Treatment,device. The PoNS device is indicated for use as a short-term treatment of gait deficit due to mild-to-moderate symptoms of MS and is to be used as an adjunct to a supervised therapeutic exercise program in patients 22 years of age and over by prescription only.

We will continue monitoring the Army Laboratoriesdevelopment by Centers for Medicare & Medicaid Service (“CMS”) of a
new pathway for coverage of innovative new devices, Transitional Coverage of Emerging Technology (“TCET”), which is replacing the repealed Medicare Coverage of Innovative Technologies (“MCIT”) rule. CMS is expected to share more about TCET with the public for comments in 2023. As we follow the evolution of TCET, we will continue to assess our evidence generation strategy to maximize the potential to gain CMS reimbursement benefits as a result of our Breakthrough designation in MS. While we will continue to monitor this, we will also remain focused on building out our reimbursement strategy for both commercial and government payers. We are still working to understand current Medicare requirements and policies for coverage, coding, and payment of durable medical equipment and assess how the PoNS device may be treated with respect to coding, coverage, and reimbursement under the Medicare program.

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We also intend to provide supportbroad access and reimbursement for the executionPoNS Therapy over time through commercial insurers. Prior to the initiation of clinical studies for FDA marketing authorization. 

Based on our research and development work performed underCMS or broad commercial payer coverage, we anticipate the CRADA, we intendprimary source of sales will be self-pay patients. We expect to initially seek FDA marketing authorization only for treatmentsupport the cost of the PoNS Therapy by offering a cash pay discount, collaborating with third parties to provide self-pay patients with chronicfinancing options as well as working with advocacy groups and charitable organizations to help self-pay patients access our technology. In general, we anticipate that it will take at least 24 months to obtain broad coverage and reimbursement among government and private payers.

In September 2021, we started activities to set up and implement a new study as part of a Therapeutic Experience Program, or PoNSTEP, with NYU Langone Health as our first Center of Excellence clinical site. During 2022, we added four additional clinical sites to the program and recruitment site information can be found on clinicaltrials.gov. PoNSTEP is a Helius-sponsored, open label observations, interventional multi-center outcome research trial designed to assess adherence to on-label PoNS therapy for improvement in gait deficits with MS in a real-world clinical setting. The study will measure subjects’ adherence to PoNS therapy, which combines the PoNS device with physical therapy, to better understand the relationship between adherence to the treatment regimen and therapeutic functional outcome. The primary endpoint of the study is maintenance of gait improvement from the end of supervised therapy (Phase 1) to the end of unsupervised therapy (Phase 2) in relation to the subject’s adherence to PoNS therapy. The secondary endpoints are improvement of gait and balance deficit over time, and clinical global impression of change. The study will be conducted at eight to ten Centers of Excellence across the U.S., with an estimated average of four PoNS devices per site. Enrollment commenced in the second half of 2022 and is expected to be completed in 2023 with targeted participation of approximately forty to fifty patients with MS.

U.S. Regulatory Status: Stroke

In August 2021, we received Breakthrough Designation for the PoNS device as a potential treatment for dynamic gait and balance deficits due to mild-symptoms from stroke, to moderate-TBI. Should we obtainbe used as an adjunct to a supervised therapeutic exercise program in patients 22 years of age and over. With Breakthrough Designation received, a clinical trial of PoNS therapy in stroke patients in collaboration with Medical University of South Carolina is planned to commence in 2023 with initial patient enrollments beginning in the second half of 2023.

U.S. Regulatory Status: mmTBI

Our U.S. regulatory strategy initially focused on pursuing de novo classification and clearance of the PoNS device from the FDA marketing authorizationfor the treatment of balance deficit due to mmTBI.

We submitted a request for de novo classification and clearance of the PoNS device to the FDA for this indication in August 2018. This request was supported by data from two of our clinical trials in mmTBI, including our registrational trial, TBI-001.

In April 2019, we plan to develop the PoNS Treatment to treat other indications caused by neurological disorders. We would sponsor the regulatory process for these additional indications, but the Army Laboratories has agreed to support the execution of required studies. The amount of such support, if any, and the terms of such responsibility to support such studies are not yet negotiated, and we have no assurance that we can ultimately reach agreement with the Army Laboratories on such amount or terms of support. There can be no assuranceannounced that the Army Laboratories will not otherwise attempt to renegotiateFDA had completed its responsibilities under the U.S. Army Agreement or the CRADA.

The CRADA may be terminated by NHC or the Army Laboratories unilaterally at any time by providing the other party written notice at least 30 days prior to the desired termination date. The CRADA is subject to a four-year automatic extension as requiredreview and had denied our request for both FDA marketing authorization in the event that a pre-market approval application with the FDA is required, as well as for commercializationde novo classification and clearance of the PoNS Treatment. The CRADA terminates on December 31, 2018 unlessdevice for the parties agreetreatment of balance deficit due to extendmmTBI. In reaching its conclusion, the term. We are required to commercializeFDA noted, via a denial letter, that although the PoNS Treatment by December 31, 2021.

As of December 31, 2017, we have received a total of approximately $3.0 million with respect to reimbursements for expenses owed to the us for completion of development milestones, of which $0.2 million of the total received has been recorded as an advance against the fifth and final milestone. All reimbursement amounts received are credited directly to research and development expenses.

Manufacturing

We presently have relationships with three vendor partners on the design, development and manufacturingsafety profile of the PoNS device: Cambridge Consulting, LLC, or Cambridge, Ximedica, LLC, or Ximedica and Key Tronic Corporation, or Key Tronic.  Ximedica was our original design and development and clinic unit manufacturing partner. In January 2017, we entered into an agreement with Cambridge, pursuantdevice is acceptable, the FDA did not have sufficient information to which Cambridge assumed responsibilities fordiscern the design and development, performance of the engineering and design verification testingrelative independent contributions of the PoNS device and documentation supportphysical therapy on the improvements from baseline. The FDA noted that we could generate additional data to address its concerns and resubmit our application.

In October 2019, we had a pre-submission meeting where the FDA provided feedback needed to help complete the design of a new clinical trial intended to address the FDA’s request for a trial that demonstrates the benefit of the PoNS Therapy compared to physical therapy alone. In January 2020, we received the FDA’s feedback on the minutes from the October 2019 pre-submission meeting. In its feedback, the FDA provided post-meeting notes with specific recommendations regarding the trial design that were not discussed in the October 2019 pre-submission meeting.

Based on the receipt of the FDA’s final minutes from the pre-submission meeting, we are assessing the feasibility of a clinical program to advance the development of a study aimed to obtain clearance for gait and balance deficits in mmTBI if nondilutive financing to fund the program becomes available.

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European Regulatory Status

In December 2018, we submitted an application for a CE Mark, which, if approved, would allow us to market the PoNS device in the EU. During the second quarter of 2019, we engaged with regulators in Europe to answer questions that we received from them as part of their review of our PoNS device for CE marking. In August 2019, we withdrew our application from the EU marketing process due to uncertainty in Europe caused by the switch from the Medical Device Directive, or MDD, to the Medical Device Regulation, or MDR, Brexit, and the withdrawal of Lloyd’s Register Quality Assurance, our notified body, from the EU notified body business. We have engaged G-MED NA (North America) as our new ISO registrar and will reconsider submitting to the EU when conditions stabilize.

Australian Regulatory Status

In the third quarter of 2019, we initiated the submission of our application to the Therapeutic Goods Administration, or TGA. We supplemented our submission with additional data based on questions supplied to date and provided responses to additional questions during the third quarter of 2020. In November 2021, we received market authorization from the TGA for the FDA submission,sale of PoNS as a Class IIa medical device. In Australia, PoNS is intended for short term use by healthcare professionals as an adjunct to a therapeutic exercise program to improve balance and gait. PoNS is not intended to assistbe used alone without an exercise program.

Exclusive Distribution Agreement

On March 3, 2023, we entered into an Exclusive Distribution Agreement with Health Tech Connex, Inc. (“HTC”) (“Exclusivity Agreement”), whereby, subject to certain terms and conditions, we granted to HTC the exclusive right to provide the PoNS Therapy in the identificationFraser Valley and Vancouver metro regions of British Columbia, where HTC has operated a PoNS authorized clinic since February 2019. HTC is to purchase the PoNS devices for use in these regions exclusively from us and transition to, our commercial-scale manufacturer.  on terms no less favorable than the then-current standard terms and conditions. This Exclusivity Agreement replaces the previous Clinical Research and Co-Promotion Agreement (“Co-Promotion Agreement”) between the parties dated October 2019.

On December 29, 2017, we selected Key Tronic as our contract manufacturing partner for the PoNS device after a competitive selection process. Product Development, Manufacturing and Logistics Services

The commercial design of the PoNS device will be is manufactured and assembled by Key Tronic Corporation (“Key Tronic”), our contract manufacturing partner since 2017, at Key Tronic’s facilitiesits facility located in Oakdale, Minnesota. Key Tronic will manufacturemanufactures devices for engineering and design verification testing and for our FDA submission as well as buildcommercial devices for launch inventory. Key Tronic has multiple locations across the United States,U.S., Mexico and China with back-up manufacturing capabilities to help mitigate the risk of a single source provider. We remain ultimately responsible for the compliance of our submissions and products, and activities performed on our behalf.

We place an emphasis on protecting our patented technology, trade secrets and know-how and only share confidential information on an as needed basis. Ximedica and Key Tronic areis registered as a medical device manufacturersmanufacturer in good standing with the FDA and along with Cambridge are certified in accordance with International Organization for Standardization, or ISO, 13485, a comprehensive quality

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management system for the design and manufacture of medical devices. In addition, on November 30, HMI maintains a compliant quality management system certified to ISO 13485:2016 NHC received our ISO 13485 certification.and compliant with MDSAP requirements for the U.S., Canada and Australia

During 2021, we contracted with Healthlink International Inc. (“Healthlink”) to provide third party logistics for domestic and Canadian shipment and order fulfillment, and to provide warehousing services for finished goods. Healthlink began fulfilling orders in the United States effective with the commencement of commercial sales in the United States in April 2022 and in Canada during the fourth quarter of 2022. Healthlink is a life science solutions company, specializing in logistics, temperature-controlled warehousing, fulfillment and freight management as well as back-office services, including multilingual customer service, financial services and VAT management.

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Commercialization

We believe that, due toCanadian Commercialization Efforts

In March 2019, we commenced the lackcommercialization of non-invasive devices currently on the market, if commercialized, theour PoNS Treatment will beTherapy in Canada, where PoNS became the first and only device authorized by Health Canada for the treatment of balance deficit due to mmTBI. Throughout 2019, we made important progress in advancing and refining our commercialization strategy in Canada building access, awareness and credibility for the PoNS Therapy, including the acquisition of the Heuro Canada operating entity of HTC. These efforts, which were led by our local Canadian commercial team, included the establishment of our authorized clinic network throughout Canada, launching digital marketing campaigns, and building key opinion leader and advocacy networks.

On March 18, 2020, the Company received notification that addressesits Canadian Class II license amendment application for the high unmet needstreatment of brain injurygait deficit in patients with balance disorders.mild and moderate symptoms from MS, when used in conjunction with physical therapy, was successful and received marketing authorization for PoNS from Health Canada.

Following in-depth market analysis and field intelligence, our Canadian commercial team began an expansion plan to increase the number of authorized PoNS clinics. During the year ended December 31, 2022, we authorized 11 new clinical locations to have 48 clinic locations across Canada as of December 31, 2022. In addition to continuing to increase the number of clinic locations, we have shifted our focus to driving patient throughput to these clinics. Sales performance in Civilian Population

InCanada throughout 2021 and into 2022 has been impacted by the United States, there are approximately five million patients suffering from chronic symptomsCOVID-19 pandemic due to TBI,space restrictions that the provincial governments have imposed as well as the risk tolerance of patients and therapists.

We continue to refine our go-to-market pricing model. In 2020, we implemented a modified pricing approach which approximately 40%is focused on reducing the need for clinics and patients to pay large, upfront costs at the start of treatment. We have balancealso experimented with various promotional pricing programs resulting in lower unit prices for both PoNS system purchases and gait disordermouthpieces in order to increase access to the PoNS Therapy and drive market awareness which we believe resulted in an increase in the volume of units sold, beginning in the second half of 2020. We extended the promotional pricing through the end of 2021 including any order placed and accepted, but not fulfilled before December 31, 2021. The promotional pricing was discontinued in 2022 when new pricing was established which focuses on encouraging the clinic in proposing the PoNS therapy to their patient and established a volume discount program that provides a laddered pricing discount to clinics based upon PoNS purchases in an effort to make a difference in the outcomes to their patients and enhance their practice.

The value dossiers for mmTBI and MS that were created in mid-2020 to fully demonstrate in both scientific and financial terms, the merits of PoNS Therapy for claimants are now being utilized along with submissions from clinics on behalf of their patients. The dossiers are provided to our clinics across Canada to submit as their primary complaint. By definition all TBIs arepart of treatment plans with reimbursement applications to the result of an accident, withpayer community. Our reimbursement strategy for mmTBI is focused initially on the patient’s workers’ compensation responsible for the medicalauto collision insurance and income replacement costs for those injured at work.

Our commercialization strategy is premised on leveraging workers’ compensation, or WC, payers to drive early reimbursements and entice disability, Medicaid/Medicare and other commercial payers to study the experience in the WC market to help accelerate support for coverage under Medicaid/Medicare. As the PoNS Treatment has been deemed a non-significant risk device study for TBI, under Institutional Review Board, or IRB, supervision we intend to launch clinical experience programs for TBI patients to develop and test our commercialization strategy prior to FDA clearance and launch.  Specifically, we intend to undertake the following:

In addition, we intend to leverage high demand and hospital/clinic system savings to drive premium pricing for the PoNS Treatment, as well as target our marketing activity at physical therapy clinic systems to drive demand into their system, by negotiating exclusivitylong-term disability cases. Our reimbursement strategy for a given territoryMS is focused on commercial insurers/extended health benefits and time-period. Further, we intend to leverage the clinic system equity to target physical therapy clinic referral base for an efficient deployment of our sales representatives.

Our clinical experience program contemplates identifying “clinical centers of excellence” around the country and conducting training withcharitable foundations that support these centers in the use of the PoNS device along with the specific therapeutic protocol, with participants selected based on an established criterion. This would also be reinforced with patient clinician and claim staff outreach and education.

PoNS in the U.S. Army

The U.S. Army’s interest in the PoNS Treatment stems from the high incidence of TBI in soldiers and the fact that there are few proven, effective treatments available for those soldiers who suffer from chronic TBI symptoms. While the number of cases of TBI among active duty personnel may vary based on troop levels maintained by the federal government, our primary target market will be the large number of retired soldiers within the Veteran’s Administration, or VA, system who suffer from chronic TBI symptoms as this population is less subject to material, year-to-year fluctuation. Based on the U.S. Army’s indication of interest, we estimate that there is a sufficient potential market of active duty and retired soldiers who could potentially benefit from the PoNS treatment due to their chronic TBI symptoms. However, the U.S. Army is not under any obligation to purchase our product under the U.S. Army Agreement, the CRADA or any other agreement with us, and there is no assurance that the U.S. Army will ultimately purchase our product, even if we do demonstrate effectiveness and obtain FDA marketing authorization.

If it ultimately decides to purchase the PoNS Treatment from us, we expect that the U.S. Army would deploy the treatment to active duty personnel through their rehabilitation centers under orders from the central medical command. All personnel are expected to be certified PoNS therapists supported by live, paper and video-based training materials developed through this project by the U.S. Army. We also intend to pursue other military organizations in relevant countries based on need and size of potential deployment.conditions.

As part of our overall PoNS Therapy strategy, we are also gathering comprehensive health economic assessments of treatment outcomes. These data will, in-turn, be used to support our applications for WC, auto insurance and commercial insurance reimbursement initiatives in Canada, the U.S. and other markets around the world. We believe the Canadian commercial experience will be extremely valuable to prepare us for our launches in the U.S. and internationally.

The real-world results from the collective experience of our patients that have completed the 14-week PoNS Therapy, in Canada thus far, have been encouraging. Consistent with what we observed in our two clinical trials, one for 5 weeks and the other for 14 weeks, commercial MS and mmTBI patients demonstrated improvements in balance and gait within the first two weeks followed by continued improvement over the following twelve weeks. The majority of patients had a mean patient adherence to treatment of over 90% and showed significant improvement in their balance and gait with a meaningful clinical difference at the end of their treatment. The consistency of the patient results from our initial commercial experience supports our plans to expand access PoNS Therapy in Canada.

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U.S. Commercialization Activities

On March 26, 2021, we received marketing authorization from the FDA for the PoNS device. The PoNS device is indicated for use as a short term treatment of gait deficit due to mild-to-moderate symptoms of MS and is to be used as an adjunct to a supervised therapeutic exercise program in patients 22 years of age and over by prescription only.

Throughout the pre-commercial phase during 2021 and early 2022, we developed and refined our commercial strategy including a focus on payer strategy, both government and commercial, securing distribution licenses in various states and beginning to build relationships with key large neurorehabilitation centers, which focus on treatment of MS patients. We continue to generate data on outcomes of the PoNS Therapy generated from treatment of patients in Canada and ensuring that our scientific data is presented at many of the key national and international neurology and neuromodulation meetings. We believe this scientific dissemination may begin to pave the way to establishing the PoNS Therapy as the standard of care for the treatment of MS-related gait deficit.

We began accepting prescriptions for PoNS in the U.S. in the first quarter of 2022, and our first commercial sales began in April 2022. Presently, PoNS Therapy is not covered by the Medicare program or reimbursed by any other payors in the US.

We have targeted specific Key Opinion Leaders (i.e., neurologists and physiatrists) and their associated neurorehabilitation centers, where selected physical therapists will be trained to deliver the PoNS Therapy. Importantly, this focused strategy will also allow us to measure patient outcomes to determine if they are similar to those observed in our clinical trials.

In June 2022, we launched the Patient Therapy Access Program (“PTAP”) program, which will provide qualifying patients access to PoNS therapy at a significantly reduced price. To qualify for the PTAP pricing, the patient must provide a letter of medical necessity and consent to the release of their medical records. Because of the significantly reduced price, the patient must also sign a document that prohibits him/her from submitting a reimbursement claim to third-party payers. PTAP participants are also invited to join the Company’s registry program, which is open to all MS patients regardless of their PTAP participation. The PoNS registry is structured to collect important health information and establish the value of PoNS on key therapeutic outcomes, hence supplementing the data collected through clinical trials and real-world data. We began processing orders under the PTAP program in June 2022, which is expected to run through June 2023.

In December 2022, we launched an e-commerce site in the US to make it easier for patients to obtain PoNS systems. Accessed via ponstherapy.com, the site is powered through a new partnership with UpScriptHealth, a leading telehealth company focused on making medications and devices available direct-to-consumer. UpScriptHealth’s platform provides for (1) online health evaluations with qualified medical providers, (2) fulfillment of prescriptions required for PoNS Therapy™ and (3) shipping of PoNS devices directly to the homes of eligible patients in the United States. The UpScriptHealth platform makes it possible for people with MS to have a PoNS device delivered directly to their doorstep.

During 2021, we contracted with an industry consultant to conduct a health economic study of PoNS. Based upon the results of this study and comparing PoNS to other medical devices utilizing similar patented technologies we established a U.S. list price for the PoNS device of $25,700, comprised of $17,800 for the controller and $7,900 for the mouthpiece. We are pursuing commercial insurance coverage and Medicare reimbursement for PoNS within the Durable Medical Equipment, or DME, benefit category. While there are currently no specific Healthcare Common Procedure Coding System, or HCPCS, codes to describe the PoNS device or mouthpiece, we intend to also focususe miscellaneous codes – E1399 (Miscellaneous durable medical equipment) and A9999 (Miscellaneous DME supply or accessory, not otherwise specified) until specific HCPCS codes are created. We initially applied for unique HCPCS codes during the third quarter of 2021. In order to address CMS’s request for additional information to “further understand the PoNS device indication for use”, we decided to monitor real-world utilization of PoNS Therapy and collect additional clinical evidence through our ongoing PoNSTEP study and upcoming registry program. Based on consistent reports of positive therapeutic benefits experienced by MS patients through our commercial programs, we plan to re-engage in our communication with CMS leveraging new information that can answer their questions and argue convincingly in favor of obtaining unique

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HCPCS codes for PoNS. We expect to interact again with CMS in the second half of 2023. In general, we anticipate that it will take at least 24 months to obtain broad coverage and reimbursement among government and private payers.

Commercialization in Other Markets

We submitted an application for a CE Mark in December 2018. In preparation for our launch in the United Kingdom, or UK, and the EU, we entered into a consulting agreement with a UK-based company with expertise in the development of new services in the healthcare industry to leverage local market insights to develop a comprehensive commercialization strategy and tactical plan for launch of the PoNS Therapy in the UK. As previously described, in August 2019, we withdrew our application for EU market authorization and will revisit our UK and EU commercialization plans as terms of market authorization become clearer under the new regulations.

We submitted an application to the TGA in Australia during the third quarter of 2019. We supplemented our submission with additional data based on questions supplied to date and provided responses to additional questions during the third quarter of 2020. In November 2021, we received market authorization from the TGA for the sale of PoNS as a Class IIa medical device. In Australia, PoNS is authorized as a non-implantable neurostimulator intended for short term used by healthcare professionals as an adjunct to a therapeutic exercise program to improve balance and gait. PoNS is not intended to be used alone without an exercise program. We are working to establish a distribution partner for Australia but have not yet had any commercial sales of PoNS in Australia.

Global Economic Conditions

Generally, worldwide economic conditions remain uncertain, particularly due to the effects of the COVID-19 pandemic and increased inflation. The general economic and capital market conditions both in the U.S. and worldwide, have been volatile in the past and at times have adversely affected our access to capital and increased the cost of capital. The capital and credit markets may not be available to support future capital raising activity on favorable terms. If economic conditions decline, our future cost of equity or debt capital and access to the capital markets could be adversely affected.

The COVID-19 pandemic that began in late 2019 introduced significant volatility to the global economy, disrupted supply chains and had a widespread adverse effect on the nation’s defensefinancial markets. Additionally, our operating results could be materially impacted by changes in the overall macroeconomic environment and veterans brain injury centersother economic factors. Changes in economic conditions, supply chain constraints, logistics challenges, labor shortages, the conflict in Ukraine, and steps taken by governments and central banks, particularly in response to the COVID-19 pandemic as well as other stimulus and spending programs, have led to higher inflation, which is comprisedhas led to an increase in costs and has caused changes in fiscal and monetary policy, including increased interest rates. Although we may take measures to mitigate these impacts, if these measures are not effective, our business, financial condition, results of a networkoperations, and liquidity could be materially adversely affected.

Coverage and Reimbursement

Canadian Reimbursement

We believe that traditional life and health payers may be among the earliest to provide coverage and reimbursement for the PoNS Therapy, and therefore, we are focusing on gaining coverage for the PoNS Therapy through them. Life and health encompass long- and short-term disability claims. Because these payers are responsible for both medical expenses and lost wages, they have an incentive to seek ways to help injured employees to return to work. As part of eighteen centers, operating out of thirteen militaryour commercial treatment facilitiesprogram in Canada, we will collect both outcomes and five Department of Veterans Affairs medical centers.return to work data, which we plan to utilize with life and health, provincial workers compensation insurance programs, and property and casualty insurers to demonstrate both the clinical and economic value associated with the PoNS Therapy.

U.S. Reimbursement

In the U.S., we plan to engage with select payer segments to obtain coverage and reimbursement for the PoNS Therapy. We intend to establish pre-launchcombine evidence from our clinical trials and real-world experience programsfrom commercial clinics in certain select centers.Canada to

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demonstrate the value proposition of the PoNS Therapy to payers and support favorable coverage and reimbursement decisions.

PoNS OutsideCMS has indicated that it is developing a rule that would provide a pathway for expedited coverage of technologies under the United States

Medicare program, though that rule has yet to be released. While we will continue to monitor this, we will also remain focused on building out our reimbursement strategy for both commercial and government payers. We intendcontinue to commercializework with Medicare requirements and policies for coverage, coding, and payment of durable medical equipment and assess how the PoNS device outsidemay be treated with respect to coding, coverage, and reimbursement under the United States, subject to approval by foreign regulatory authorities.  We will evaluate the benefits of commercialization in certain territories either independently or with collaboration partners.  For example, we intend to enter into a definitive exclusive license agreement with A&B (HK) Company Limited to commercialize the PoNS device in certain Asian countries.Medicare program.

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Competition

The neurostimulation market is predominatelypredominantly comprised of surgically implanted, invasive technologies that are growing but are not directly competitive with our technology. Our competitors in the industrySeveral neurostimulation companies are predominantly large, publicly-traded companies that have a history in the market, have significantly easier access to capital and other resources and have an established product pipeline. The combined clinical research and product development done by the industry, including by us and all of our competitors, is uncovering the secretsbeneficial effects of neuro-modulationneurostimulation which now establishes neurostimulationneuromodulation as a legitimatevalid and scientifically validatedsupported approach to the treatment of neurological conditions, and accordingly, we expect for competition in the non-invasivenon-implantable space to grow in the future.

However, we believe that we will have the first-mover advantage in the non-invasivenon-implantable neurostimulation space.

We believe that the PoNS TreatmentTherapy introduces an innovative target and method of stimulation, because targeting the tongue for neurostimulation provides several clear advantages that competitively distinguish the PoNS Treatment,Therapy, which are discussed below.

Advantages of the PoNS TreatmentTherapy

We believe that the PoNS TreatmentTherapy offers the following benefits over existing neuro-stimulationneurostimulation technologies:

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U.S. Patent Nos. 8,909,345; 9,020,612; 9,656,078; 9,597,501; 9,597,504; 9,656,069; 10,293,163; 10,328,263; 11,185,696; and 9,656,06911,285,325, and U.S. Application No. 17/704,051 claim priority to U.S. Patent No. 8,849,407.

A U.S. provisional patent application provides the means to establish an early effective filing date for a later filed nonprovisional patent application. Therefore, though the two provisional applications have expired, they establish a priority date for U.S. Patent Nos. 8,849,407; 8,909,345; 9,020,612; 9,656,078; 9,597,501; 9,597,504; 9,656,069; 10,293,163; 10,328,263; 11,185,696; and 9,656,069,11,285,325, U.S. Application No. 17/704,041, and any future filings that claim priority. We intend to file additional continuation applications in the United States Patent and Trademark Office, or USPTO, claiming priority to U.S. Provisional Patent No. 8,849,407Application Nos. 61/019,061 and 61/020,265 to protect other aspects of the PoNS device and related non-invasive neurostimulation techniques.

ANR holds an interest in the Patent Pending Rights pursuant to an exclusive license from the inventors. U.S. Patent Nos. 8,909,345; 9,020,612; 9,656,078; 9,597,501; 9,597,504; 9,656,069; 10,293,163; 10,328,263; 11,185,696; and 9,656,06911,285,325, and U.S. Application No. 17/704,051 are included in the exclusive license as the exclusive license agreement

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covers (i) U.S. Patent Application No. 12/348,301 (now U.S. Patent No. 8,849,407) and Provisional Application No. 61/019,061, (ii) any patents issuing therefrom and (iii) any patents claiming priority to U.S. Patent Application No. 12/348,301 or Provisional Application No. 61/019,061, which U.S. Patent Nos. 8,909,345; 9,020,612; 9,656,078; 9,597,501; 9,597,504; 9,656,069; 10,293,163; 10,328,263; 11,185,696 and 9,656,069 11,285,325, and U.S. Application No. 17/704,051 claim priority through such provisional application as well as through Provisional Application 61/020,265.

In addition, ANR has agreed that ownership of any improvements, enhancements or derivative works of the Patent Pending Rights that are developed by NHCHMI or ANR shall be owned by NHC,HMI, provided that if NHCHMI decides not to patent such improvements, ANR may choose to pursue patent rights independently. Pursuant to the Sublicense Agreement, NHCHMI has agreed to pay ANR royalties equal to 4% of NHC’sHMI’s revenues collected from the sale of devices covered by the Patent Pending Rights and services related to the therapy or use of devices covered by the Patent Pending Rights in therapy services. The Sublicense Agreement provides that the sublicense granted by ANR to NHC,HMI, if in good standing, shall not be cancelled,cancelled; limited or impaired in any way should there be a termination of the master license granted by the inventors to ANR, which was acknowledged by the inventors in the Sublicense Agreement. On June 6, 2014, NHCHMI and ANR entered into a second amended and restated sublicense agreement, or the Second Sublicense Agreement, which acknowledges the Reverse Merger (see “Our Corporate History - Acquisition of NeuroHabilitation CorporationHelius Medical, Inc and Concurrent Financing” below) and adds us as a party to the agreement.

The license of the Patent Pending Rights is subject to the right of the government of the United States, which funded certain research relating to the development of the PoNS device, to a nonexclusive, non-transferable, irrevocable, paid-paid up license to use the Patent Pending Rights for governmental purposes. In addition, NHCHMI has granted a perpetual, royalty-free license to the Patent Pending Rights back to ANR for non-profit research and development activities, which do not compete with NHC’sHMI’s business and to produce and derive revenues from devices and services in connection with investigational uses of the PoNS device and related technology.

The license of the Patent Pending Rights is also subject to the terms of the CRADA. In the event that we are not willing or unable to commercialize the PoNS technology within four years from the expiration of the CRADA, the Company is required to transfer possession, ownership and sponsorship/holdership of the regulation application, regulatory correspondence and supporting regulatory information related technology to USAMRMC and grant the U.S. Government a non-exclusive, irrevocable license to any patent, copyright, data rights, proprietary information or regulatory information for the U.S. Government to commercialize the technology.

On April 17, 2017, we announced that the USPTO had issued two medical method patents (U.S. Patent Nos. 9,597,501 and 9,597,504) that together further protect the intellectual property rights for our core asset, the PoNS device therapeutic techniques. These patents bolster the current family of PoNS patents protecting various forms of physical and cognitive therapy combinations with both skin and oral cavity stimulation using the PoNS  device or any equivalent neurostimulation device.

Company Owned Intellectual Property

On May 23, 2017, we announced that the USPTO had issued its first method patent (US Patent No. 9,656,069) that features claims directed to the useAs of the PoNS device for human performance improvement rather than rehabilitation therapy. This patent is the first member of the existing family of patentsFebruary 15, 2023, we have received for our PoNS device. We have filed 29 U. S.36 U.S. patent applications related to various technical and ornamental aspects of the PoNS device. We have also filed 13device: 15 non-provisional patent applications that describe various technical features in the current version device and 1621 design patent applications describing various ornamental designs. We are the sole assignee for these 2936 U.S. patent filings. Prior to issuance, once the USPTO determines that a patent application meets all of the statutory requirements for patentability it provides a notice of allowance. In addition to the first issued patent (U.S. Patent No.

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9,072,889), the USPTO has issued nine14 utility patents 16and 21 design patents and provided noticespatents.

Table of allowance for utility applications as summarized in the table below:Contents

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The FDA Review, Clearance and Approval Processes

EachUnless an exemption applies, each medical device we seek to commercially distributedistributed in the United States must first receiveU.S. requires either FDA clearance under Sectionof a 510(k) premarket notification, approval of the FD&C Act, receive de novo down-classification and 510(k) clearance, or pre-marketa premarket approval, application, or PMA, from the FDA, unless specifically exempted by the FDA. FDA review andor approval is required for each intended use of a device, regardless of whetherde novo application. Under the device has been approved for other indications for use. The FDA classifies allFDCA, medical devices are classified into one of three classes. Devices deemed to pose the lower risk are categorized as either classes—Class I, Class II or Class III— depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness. Classification of a device is important because the class to which a device is assigned determines, among other things, the necessity and type of FDA review required prior to marketing the device.

Class I devices are those for which safety and effectiveness can be assured by adherence to FDA’s "general controls" for medical devices, which include compliance with the applicable portions of the FDA’s Quality System Regulation, or QSR, facility registration and product listing, reporting of adverse medical events, and appropriate, truthful and non-misleading labeling, advertising, and promotional materials. Some Class I devices also require premarket clearance by the FDA through the 510(k) premarket notification process described below.

Class II which requiresdevices are subject to FDA’s general controls, and any other "special controls" deemed necessary by FDA to ensure the safety and effectiveness of the device, such as performance standards, product-specific guidance documents, special labeling requirements, patient registries or post-market surveillance. Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process, though certain Class II devices are exempt from this premarket review process. When a 510(k) is required, the manufacturer tomust submit to the FDA a premarket notification submission demonstrating that the device is "substantially equivalent" to a legally marketed device, which in some cases may require submission of clinical data. Unless a specific exemption applies, 510(k) pre-marketpremarket notification application requesting clearancesubmissions are subject to user fees. If the FDA determines that the device, or its intended use, is not substantially equivalent to a legally marketed device, the FDA will place the device, or the particular use of the device, for commercial distribution in the United States, unlessinto Class III, and the device is exempted from this requirement. Devicessponsor must then fulfill much more rigorous premarketing requirements.

Class III devices, consisting of devices deemed by the FDA to pose the greatest risk, such as life sustaining,life-sustaining, life-supporting or implantable devices, or devices deemed not substantially equivalent to a previously 510(k) cleared device are categorized as Class III and require submission and approval of a PMA.

In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, with respect to intended use, technology and safety and effectiveness, in order to clear the proposed device for marketing. Clinical data may be required to support a determination of substantial equivalence.predicate device. The PMA pathway requires an applicant to demonstrate the safety and effectiveness of theClass III devices cannot be assured solely by general or special controls. Submission and FDA approval of a premarket approval, or PMA, application is required before marketing of a Class III device based, in part, on extensive data, including, but not limitedcan proceed. As with 510(k) submissions, unless subject to technical, preclinical, clinical trial, manufacturing and labeling data.an exemption, PMA submissions are subject to user fees. The PMA process is typically required for devices that are deemedmuch more demanding than the 510(k) premarket notification process. A PMA application, which is intended to pose the greatest risk, such as life-sustaining, life-supporting or implantable devices. However, some devices are automatically assigned to Class III regardless of the level of risk they pose, because they have not previously been classified into a lower risk class by the FDA. Manufacturers of these devices may request that the FDA review such devices in accordance with the de novo classification procedure, which allows a manufacturer whose novel device would otherwise require the submission and approval of a PMA prior to marketing to request down-classification of the device on the basisdemonstrate that the device presents low or moderate risk. If the FDA agrees with the down-classification, the applicant will then receive clearance of a 510(k) to market the device. This clearedis safe and effective, must be supported by extensive data, typically including data from preclinical studies and human clinical trials.

Our PoNS device can then be usedis currently regulated as a predicateClass II medical device for future 510(k) submissions by the manufacturer or a competitor.

We intend to utilize the de novo classification procedures to seek marketing authorization for the PoNS device, because there is currently no predicate cleared or approved by the FDA for commercial distribution and no existing classification decision by the FDA for such a device. The process of obtaining regulatory clearances or approvals, or completing the de novo classification process, to market a medical device can be costly and time consuming, and we may not be able to successfully obtain pre-market reviews on a timely basis,use in MS. However, if at all.

If the FDA requires us to go through a lengthier, more rigorous examination for the PoNS device for balance and gait deficit in stroke, introducing the product for stroke could be delayed or canceled, which could cause our launch to be delayed. In addition, the FDA may determine that the PoNS device requires the more costly, lengthy and uncertain PMA process.canceled. For example, if the FDA disagrees with our determinationdecides that the de novo classification procedures are not the appropriate path to obtain marketing authorizations for the PoNS device in stroke, the FDA may require us to

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submit a PMA application, which is generally more costly and uncertain and can take from one to three years, or longer, from the time the application is submitted to the FDA until an approval is obtained. Further, even with respect to those future products where a PMA may not be required, we cannot be certain that we will be able to obtain 510(k) clearancesclearance with respect to those products.our PoNS device.

510(k) Clearance Process

To obtain 510(k) clearance wefor a medical device, an applicant must submit a pre-market notification to the FDA a premarket notification submission demonstrating that the proposed device is substantially equivalent“substantially equivalent” to a previously-cleared 510(k)legally marketed device, or isknown as a “predicate device.” A legally marketed predicate device may include a device that was in commercial distribution beforelegally marketed prior to May 28, 1976 for which a PMA is not required (known as a “pre-amendments device” based on the date of enactment of the Medical Device Amendments of 1976), a device that has been reclassified from Class III to Class II or Class I, or a device that was found substantially equivalent through the 510(k) process. A device is substantially equivalent if, with respect to the predicate device, it has the same intended use and has either (i) the same technological characteristics, or (ii) different technological characteristics, but the information provided in the 510(k) submission demonstrates that the

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device does not raise new questions of safety and effectiveness and is at least as safe and effective as the predicate device. A showing of substantial equivalence sometimes, but not always, requires clinical data.

Before the FDA will accept a 510(k) submission for substantive review, the FDA will first assess whether the submission satisfies a minimum threshold of acceptability. If the FDA determines that the 510(k) submission is incomplete, the FDA will issue a “Refuse to Accept” letter which generally outlines the information the FDA believes is necessary to permit a substantive review and to reach a determination regarding substantial equivalence. An applicant must submit the requested information before the FDA will proceed with additional review of the submission. Once the 510(k) submission is accepted for review, by regulation, the FDA has not yet called for the submission of90 days to review and issue a PMA application.determination. As a practical matter, clearance often takes longer. The FDA’s 510(k) clearance process usually takes from three to 12 months from the date the application is submitted and filed with the FDA but may take significantly longer and clearance is never assured. Although many 510(k) pre-market notifications are cleared without clinical data, in some cases, the FDA requiresrequire additional information, including clinical data, to supportmake a determination regarding substantial equivalence. In reviewing a pre-market notification submission,

If the FDA mayagrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device. If the FDA determines that the device is “not substantially equivalent” to a previously cleared device, the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous PMA requirements, or can request additional information,a risk-based classification determination for the device in accordance with the “de novo” process, which may significantly prolong the review process.is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.

After a device receives 510(k) marketing clearance, any subsequent modification of the device that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) marketing clearance or, depending on the modification, PMA approval. The determination as to whether or not a modification could requiresignificantly affect the device’s safety or effectiveness is initially left to the manufacturer using available FDA guidance. Many minor modifications today are accomplished by a PMA. The FDA requires each manufacturer“letter to make this determination initially, butfile” in which the manufacture documents the rationale for the change and why a new 510(k) is not required. However, the FDA may review such letters to file to evaluate the regulatory status of the modified product at any such decisiontime and may disagree with a manufacturer’s determination. If the FDA disagrees with a manufacturer’s determination, the FDA may require the manufacturer to cease marketing and/orand recall the modified device until 510(k) clearance or PMA approval is obtained. Under these circumstances, the FDAThe manufacturer may also be subject a manufacturer to significant regulatory fines or other penalties. In addition, the FDA is currently evaluating the 510(k) process and may make substantial changes to industry requirements, including which devices are eligible for 510(k) clearance, the ability to rescind previously granted 510(k)s and additional requirements that may significantly impact the process.

De novo Classification Process

If a previously unclassified new medical device does not qualify for the 510(k) pre-market notification process because no predicate device to which it is substantially equivalent can be identified, the device is automatically classified into Class III. The Food and Drug Administration Modernization Act of 1997 established a new route to market for low to moderate risk medical devices that are automatically placed into Class III due to the absence of a predicate device, called the “Request for Evaluation of Automatic Class III Designation,” or the de novo classification procedure. This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classificationclassification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA. Prior to the enactment of the Food and Drug Administration Safety and Innovation Act, or FDASIA, in July 2012, a medical device could only be eligible for de novo classification if the manufacturer first submitted a 510(k) pre-market notification and received a determination from the FDA that the device was not substantially equivalent. FDASIA streamlined the de novo classification pathway by permitting manufacturers to request de novo classification directly without first submitting a 510(k) pre-market notification to the FDA and receiving a not substantially equivalent determination. Under FDASIA, the FDA iswas required to classify the device within 120 days following receipt of the de novo application. If the manufacturer seekssought reclassification into Class II, the manufacturer mustwas to include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. The FDA may reject the reclassification petition if it identifies a legally marketed predicate device that would be appropriate for a 510(k) or determines that the device is not low to moderate risk or that general controls would be inadequate to control the risks and special controls cannot be developed.

As previously discussed, we plan on utilizing the FDA granted de novo classification process to obtain marketing authorization for the PoNS device for balance disordergait deficit in mild- to moderate- TBI, and we plan to seekMS, which resulted in Class II classification. In order to be placed in Class II, the FDA would needrequired reasonable assurance of safety and effectiveness of the PoNS device. Under Class II, general controls (e.g., premarket notification) and special controls (e.g., specific performance testing) would beare applicable. We are currently working to complete our device verification testing with our goal for submission

Table of the de novo application and a 510(k) in the middle of 2018. To the extent the FDA completes its review in accordance with the goal of the medical device users fee amendments of 90 days, we anticipate marketing authorization in the second half of 2018.Contents

Obtaining FDA marketing authorization, de novo down-classification,classification and clearance, or approval for medical devices can beis expensive and uncertain, generally takes several years, and generally requires detailed and comprehensive scientific and clinical data. Notwithstanding the expense, these efforts may never result in FDA authorization for commercial distribution. Even if we were to obtain regulatory authorization, it may not be for the uses we believe are important or commercially attractive, in which case we would not be permitted to market our product for those uses.

Pre-market Approval ProcessClinical Trials

AClinical trials are typically required to support a PMA and are sometimes required to support a 510(k) or de novo submission. All clinical investigations of devices to determine safety and effectiveness must be submitted ifconducted in accordance with the medicalFDA’s investigational device exemption, or IDE, regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk,” as defined by the FDA, to human health, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in Class III (although the FDA has the discretionsupporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to continue to allow certain pre-amendment Class III devices to use the 510(k) process) or cannot be cleared through the 510(k) process. A PMAa subject. An IDE application must be supported by

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among appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA notifies the company that the investigation may not begin. If the FDA determines that there are deficiencies or other things, extensive technical, preclinical,concerns with an IDE for which it requires modification, the FDA may permit a clinical trial manufacturingto proceed under a conditional approval. If the device is considered a "non-significant risk," IDE submission to FDA is not required. Instead, only approval from the Institutional Review Board, or IRB, overseeing the investigation at each clinical trial site is required.

The IRB is responsible for the initial and continuing review of the IDE, and may pose additional requirements for the conduct of the study. If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements. Acceptance of an IDE application for review does not guarantee that the FDA will allow the IDE to become effective and, if it does become effective, the FDA may or may not determine that the data to demonstrate toderived from the FDA’s satisfactiontrials support the safety and effectiveness of the device for its intended use.

After a PMA isor warrant the continuation of clinical trials. An IDE supplement must be submitted to, and filed,approved by, the FDA begins an in-depthbefore a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.

During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the submitted information, which typically takes between oneinvestigational device, and three years, but may take significantly longer. During this review period,comply with all reporting and record keeping requirements.

Additionally, after a trial begins, the sponsor, the FDA may request additional information or clarification of information already provided. Also,the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Even if a clinical trial is completed, there can be no assurance that the data generated during the review period, an advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. In addition, the FDAa clinical study will conduct a pre-approval inspection of the manufacturing facility to ensure compliance with Quality System Regulations, or QSR, which may impose elaborate design development, testing, control, documentation and other quality assurance procedures in the design and manufacturing process. The FDA may approve a PMA with post-approval conditions intended to ensuremeet the safety and effectiveness of the device including, among other things, restrictions on labeling, promotion, sale and distribution and collection of long-term follow-up data from patients in the clinical studyendpoints or otherwise produce results that supported approval. Failure to comply with the conditions of approval can result in materially adverse enforcement action, including the loss or withdrawal of the approval. New PMAs or supplements are required for significant modifications to the manufacturing process, labeling of the product and design of a device that is approved through the PMA process. PMA supplements often require submission of the same type of information as an original pre-market approval application, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA and may not require extensive clinical data or the convening of an advisory panel.

Clinical Trials

A clinical trial is typically required to support a PMA and is sometimes required for a 510(k) pre-market notification. FDA’s regulations require submission and approval of an Investigational Device Exemption, or IDE, for all clinical investigations of significant risk medical devices to determine safety and effectiveness.  Abbreviated requirements apply for non-significant risk device studies.  After a clinical trial begins,will lead the FDA may place it on hold or terminate it if, among other reasons, it concludes that the clinical subjects are exposed to an unacceptable health risk. Any clinical trials we conduct must be conducted in accordance with FDA regulations as well as other federal regulations and state laws concerning human subject protection and privacy. Moreover, the results of a clinical trial may not be sufficient to obtaingrant marketing clearance or approvalapproval.

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Pervasive and Continuing U.S. Food and Drug Administration and Healthcare Regulation

After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply. These include:

Advertising and promotion of medical devices, in addition to being regulated by the FDA, are also regulated by the FTC and by state regulatory and enforcement authorities. Recently, promotional activities for FDA-regulated products of other companies have been the subject of enforcement action brought under healthcare reimbursement laws and consumer protection statutes. In addition, under the federal Lanham Act and similar state laws, competitors and others can initiate litigation relating to advertising claims. If the FDA determines that promotional materials or training constitutes promotion of an unapproved or uncleared use, it could request that modification of promotional materials or subject a company to regulatory or enforcement actions. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider promotional or training materials to constitute promotion of an unapproved or uncleared use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.

Healthcare providers, physicians, and third party payers play a primary role in the recommendation and use of our current products and for any future products for which payment is available under any federal health care program. Arrangements with third party payers, healthcare providers and physicians expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute products. In the U.S., our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the CMS, other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General), the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state and local governments. The applicable laws and regulations include the federal health care programs Anti-Kickback Statute, or AKS, and the federal Civil False Claims Act.

The AKS makes it illegal for any person, including a device manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration, directly or indirectly, in cash or in kind, that is intended to induce or reward referrals, including the purchase, recommendation, or order of a particular device, for which payment

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may be made under a federal healthcare program, such as Medicare or Medicaid. Violations of this law are punishable by up to ten years in prison, criminal fines, administrative civil money penalties and exclusion from participation in federal healthcare programs. In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it.

The Federal Civil False Claims Act imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment of government funds or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government. Penalties for a False Claims Act violation include three times the actual damages sustained by the government, plus significant mandatory civil penalties for each separate false claim and the potential for exclusion from participation in federal healthcare programs. The government may deem manufacturers to have “caused” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label. Claims which include items or services resulting from a violation of the federal AKS also are deemed false or fraudulent claims for purposes of the False Claims Act. Our future marketing and activities relating to the reporting of wholesaler or estimated retail prices for our products and other information affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our product and any future product candidates, are subject to scrutiny under this law. Conduct that violates the False Claims Act also may implicate various federal criminal statutes.

The manufacturing processes associated with medical devices are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use. The QSR also requires, among other things, maintenance of a device master file, design history file, device history records, and complaint files. As a manufacturer, we are subject to periodic scheduled or unscheduled inspections by the FDA. Any failure to maintain compliance with the QSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of products, which would have a material adverse effect on our business. The discovery of previously unknown problems with any of our products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.

The FDA has broad regulatory compliance and enforcement powers. If the FDA determines that a company has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:

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Health Canada

After a medical device is placed on the market, numerous FDA regulatoryhas been approved for commercial use in Canada, there are a number of Health Canada requirements apply,that must be adhered to including but not limited to the following:

Our Corporate History Highlights

Formation and Arrangement with Boomerang Oil, Inc.Reincorporation

We were originally incorporated in British Columbia, Canada on March 13, 2014 under the British Columbia Business Corporations Act, or the BCBCA, as “0996445 B.C. Ltd.” On March 25, 2014, and amended on April 8, 2014, we entered into an arrangement agreement with Boomerang Oil, Inc. (formerly known as 0922327 B.C. Ltd.) and 0995162 B.C. Ltd. to reorganize the business structure of such three entities in such a manner which would allow Boomerang Oil, Inc. to spin us out to become an independent entity that is a reporting issuer in Canada and for us to complete a reverse take-over of 0995162 B.C. Ltd. As a result of the arrangement agreement, we became a reporting issuer in

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the provinces of British Columbia and Alberta. In addition, the arrangement resulted in 0995162 B.C. Ltd. becoming our wholly-owned subsidiary. The assets of 0995162 B.C. Ltd. consisted of cash and 0995162 B.C. Ltd.’s interest in a letter agreement pursuant to which it had agreed to acquire all of the outstanding shares of NHC, a Delaware corporation, and to seek a listing on a recognized stock exchange.

Reincorporation in Wyoming

On May 23, 2014, we changed our name to “Helius Medical Technologies, Inc.” and filed articles of continuation with the Wyoming Secretary of State office to reincorporate from being a corporation governed by the BCBCA to a corporation governed by the Wyoming Business Corporation Act, or WBCA.

AcquisitionAct. On July 20, 2018, we reincorporated from the state of NeuroHabilitation Corporation and Concurrent FinancingWyoming to the state of Delaware.

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Acquisitions

On June 13, 2014, we completedacquired NeuroHabilitation Corporation (“NHC”) and on December 21, 2018, NHC changed its name to Helius Medical, Inc. HMI is our operating subsidiary in the acquisition of NHC by way of an agreement and plan of merger. We refer to this transaction as the Reverse Merger. Pursuant to the agreement and plan of merger, HMT Mergersub,United States.

On October 30, 2019, we acquired Heuro Canada, Inc. (“Heuro”), our wholly-owned subsidiary, merged with and into NHC with NHC as the surviving corporation. In connection with the Reverse Merger, we issued an aggregate of 7,060,016 shares of our Class A common stock, or our common stock, to the former shareholders of NHC. The Reverse Merger was deemed to be a capital transaction in substance and recorded as a reverse recapitalization of NHC whereby NHC is deemed to be the continuing, surviving entity for accounting purposes, but through reorganization, has deemed to have adopted the capital structure of Helius.

In connection with the Reverse Merger, we completed a non-brokered private placement financing of $7.02 million (CAD$7.62 million) by issuing 3,048,000 subscription receipts. Pursuant to its terms, each subscription receipt automatically converted into one unit upon satisfaction of certain escrow release conditions, which had been satisfied. Each unit consisted of one share of our common stock and one-half of one share purchase warrant with each whole warrant being exercisable at CAD$5.00 per share for a period of two years.

Listing of our Common Stock on the CSE, TSX and OTCQB

Following our Reverse Merger, we obtained approval of the listing of our common stock on the Canadian Securities Exchange, or CSE. On April 18, 2016, our common stock was listed on the Toronto Stock Exchange, or TSX,company incorporated under the symbol “HSM.” At the same time, we delisted our common stock from the CSE. Our Warrants were also approved for listing on the TSX on April 18, 2016. The Company’s common stock also began trading on the OTC Markets, or OTCQB,federal laws of Canada. Heuro is an indirect wholly owned subsidiary of HMC, a company incorporated under the ticker symbol “HSDT” on February 10, 2015.

Reverse Stock Split

Effective after the closefederal laws of business on January 22, 2018, we completed a 1-for-5 reverse stock split ofCanada. HMC is our Class A Common Stock. Since January 23, 2018, our Class A common stock has traded on a post-split basis on the OTCQB and Toronto Stock Exchange.  All share and per share amountsoperating subsidiary in this Annual Report have been reflected on a post-split basis.

Canada.

Corporate Information

Our principal executive offices are located at 642 Newtown Yardley Road, Suite 100, Newtown, PA 18940 and our telephone number is 215-944-6100. We maintain a corporate website at www.heliusmedical.com.www.heliusmedical.com. We make available free of charge through our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports, as soon as its reasonably practicable after we electronically file such material with, or furnish such material to the SEC. We are not including the information on our website as a part of, nor incorporating it by reference into this report. You may read and/or copy any materials we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for information on the Public Reference Room.Form 10-K. Additionally, the SEC maintains a website that contains annual, quarterly, and current reports, proxy statements, and other information that issuers (including us) file electronically with the SEC. The SEC’s website address is http://www.sec.gov.www.sec.gov.

EmployeesHuman Capital Resources

As a neurotechnology company focused on neurological wellness through the development, licensing or acquisition of non-implantable technologies targeted at reducing symptoms of neurological disease or trauma, our human capital is important to the long-term success of our company.

Our People

We believe our diverse workforce is comprised of engaged individuals with appropriate qualifications and competencies to support our growth. Our senior management team has an average of over 25 years of experience in the health sciences industry with recognized leadership expertise in their functional areas.

As of December 31, 2017,2022, we had ten full time26 full-time employees, of which 24 are located in the United States and 40 full-time equivalent independent contractors.  With the completiontwo are located in Canada. None of our registrational clinical trial,employees were covered by collective bargaining agreements. We have not experienced any interruptions of operations due to disputes with our employees.

Talent Acquisition, Development and Retention

Hiring, developing, and retaining high-performing employees is important to our operations and we are focused on creating experiences that foster growth, performance and retention. Retaining and acquiring the right talent in this competitive environment, particularly at speed and scale, will continue to work on completing certain activities requiredbe a priority as part of our marketing application that we submit tohave obtained FDA forde novo classification and clearance of the PoNS device. We intendOur workforce reflects talent from diverse perspectives.

Compensation, Benefits, Safety and Wellness

In addition to investoffering market competitive salaries and wages, we offer comprehensive health benefits to eligible employees.

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An investment in our scale manufacturing capabilities, internal infrastructure for core functionality, as well as full commercialization resources.

Business Uncertainties and Going Concern Risk

To date we have not generated any revenue from the salessecurities has a high degree of products or services. There are a number of conditions that we must satisfy before we will be able to generate revenue, including but not limited to obtaining FDA, Health Canada, CE Mark in Europe and the TGA, in Australia, clearance of the PoNS Treatment for balance disorder associated with TBI, manufacturing of a commercially viable

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version of the PoNS device, demonstration of safety and effectiveness sufficient to generate commercial orders by customers for our product and the creation of a national framework of PoNS-certified therapists. To date, we have not achieved many of these conditions, and the successful achievement of such conditions will require significant expenditures. Because we have not generated any revenues, we are dependent entirely on funding from outside investors. There is no guarantee that such funding will be available at all or in sufficient amounts to satisfy our required expenditures. Furthermore, even if we were able to raise sufficient capital to successfully design and manufacture a commercially viable version of the PoNS device and to receive FDA, CE Mark, Health Canada or TGA clearance, we do not currently have any contract or other arrangement to sell the PoNS Treatment. Accordingly, we cannot know for certain that we will ever be able to generate any revenue from the sales of products or services.

Additionally, based on management’s assessment there is substantial doubt about the Company’s ability to continue as a going concern. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months. While we had $5.6 million of cash as of December 31, 2017, we do not currently have sufficient resources to accomplish all of the above conditions necessary for us to generate revenue. In reviewing this filing,risk. Before you invest you should carefully consider the risks described in the section entitled “Risk Factors” and other risks described throughout this Annual Report. 

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RISK FACTORS

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition todescribed below and the other information in this Annual Report in evaluatingForm 10-K. Any of the risks and uncertainties set forth herein could materially and adversely affect our company and its business, before purchasing sharesresults of our common stock. Our business, operating resultsoperations and financial condition, which in turn could be seriously harmed due to anymaterially and adversely affect the trading price or value of the following risks. The risks described below may not be all of the risks facing our company.securities. Additional risks not presentlycurrently known to us or thatwhich we currently consider immaterial based on information currently available to us may also impair our business operations. Youmaterially adversely affect us. As a result, you could lose all or part of your investment due to any of these risks.investment.

Risks Related to Our Financial Position and Need for Capital

We have a very limited operating history and have incurred substantial net losses since our inception and anticipate that we will continue to incur substantial net losses for the foreseeable future. We may never achieve or sustain profitability.

We are a holding company and have no material assets other than cash and our ownership of all of the outstanding shares of NHC, which is our wholly owned subsidiary. NHC was incorporated in Delaware on January 22, 2013 and has had limited operations to date.

We have incurred substantial net losses since our inception. For the yearyears ended December 31, 20172022 and nine months ended December 31, 2016,2021, we incurred a net loss of $28.0$14.1 million and $12.0$18.1 million, respectively, and used cash in operationsoperating activities of $19.3$14.3 million and $7.9$13.4 million, respectively. We have an accumulated deficit of $66.4$151.1 million as of December 31, 2017.2022. Our losses have resulted primarily from costs incurred in connection with our design, manufacturing and development activities, research and development activities, building our commercial infrastructure, stock-based compensation, legal, advertising, marketing and investor relations, and general and administrative expenses associated with our operations. Even ifAlthough we are successfulhave received a medical device license from Health Canada to market the PoNS device in obtainingCanada, marketing authorization from the FDA in order to launchfor the sale of our PoNS Treatmentdevice in the United States or foreign regulatory authorities to launch outside ofU.S. and market authorization from the United States,TGA in Australia, we expect to continue to incur substantial losses for the foreseeable future as we continue to research and develop and seek regulatory marketing authorization for our product candidate.

We are subject to all of the business risks and uncertainties associated with any new business enterprise, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources, lack of revenue and the risk that we will not achieve our growth objective. If sales revenue from any product candidates that receive marketing authorization from the FDA or other regulatory body is insufficient, if we are unable to develop and commercialize any of our potential product candidates, or if our product development is delayed, we may never achieve or sustain profitability.

We will require additional financing to carry out our plan of operations and if we are unable to obtain such financing, our business may fail.

We currently have limited working capital and liquid assets. We held cash totaling $5.6 million atDuring the year ended December 31, 2017. To date2022, we have not generated anyapproximately $0.8 million in revenue from the commercial sales of products orin the United States and Canada. Because we have generated limited revenues from commercialization, our operations to date have been principally financed through public and private offerings of services.our common stocks, warrants and convertible debt and exercises of options and warrants. There are a number of conditions that we must satisfy before we will be able to generate sufficient revenue to fund our operations, including but not limited to FDA marketing authorizationthe recruitment of the PoNS devicepatients for mild- to moderate- TBI, manufacturing of a commercially-viable version of the PoNS device, obtaining favorable reimbursement from third party payers,treatment, and demonstration of effectiveness sufficient to generate commercial orders by customers for our product.

These factors raise substantial doubt about our ability to continue as a going concern through at least 12 months from the date of this Form 10-K. While we are seeking additional funding,had $14.5 million of cash as of December 31, 2022, we do not currently have sufficient resources to accomplish all of thesethe above conditions necessary for us to generate revenue,sufficient revenues to achieve profitability, and we do not expect to generate revenue in an amount sufficientwill require additional financing to fund our operations for the foreseeable future. Webeyond 2023. There is no guarantee that such funding will therefore require substantial additional fundsbe available at all or in ordersufficient amounts to continue to conduct the research and development and regulatory authorization activities necessary to bringsatisfy our product to market, to establish effective marketing and sales capabilities and to develop other product candidates. Our existing capital resources will not be sufficient to enable us to fund the completion of the development and commercialization of our current product and our product candidates. We cannot determine with certainty the duration and completion costs of the current or future development and commercialization of our product candidate or if, when, or to what extent we will generate revenues from the commercialization and sale of our current product candidate or potential future product candidates for which we obtain regulatory marketing authorization. We may never succeed in achieving regulatory authorization for our current product candidate and any potential future product candidates. We may be unable to raise the additional funding to finance our business on commercially reasonable terms, or at all. required expenditures.

If we are unable to obtain additional financing as needed, we may be forced to reduce the scope of our operations and planned capital expendituresexpenditures or sell certain assets, including intellectual property, and we may be forced to cease or wind down operations, seek protection under the provisions of the U.S. Bankruptcy Code, or liquidate and dissolve our company, which would have a material adverse effect on the value of our common stock..

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Raising additional capital by issuing securities or through debt financings or licensing arrangements may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidate on terms unfavorable to us.

Our operations to date have principally been financed by public and private offerings of our common stock warrants and convertible debt and exercises of warrants and options. In August 2022, we raised $18.0 million in gross proceeds from an equity financing. Until we can generate significant revenue from product sales, if ever, we expect to finance our

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operations through the sale of equity, debt financings, or other capital sources, including potential collaborations with other companies or other strategic transactions. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic partnerships with third parties, we may have to relinquish valuable rights to our technologies or product, candidate, future revenue streams, research programs or product candidate,candidates, or otherwise grant licenses on terms that are not favorable to us. If we are unable to raise additional capital when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts for our product candidate or our preclinical product candidates, or grant rights to develop and market potential future product candidates that we would otherwise prefer to develop and market ourselves. Any of these events could adversely affect our ability to achieve our product development and commercialization goals and have a material adverse effect on our business, financial condition and results of operations.

Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements. We may be unable to continue to operate without the threat of liquidation for the foreseeable future.

In connection with our management’s assessment, our report from our independent registered public accounting firm for the fiscal year ended December 31, 20172022 includes an explanatory paragraph stating that our recurring losses from operations and net capital deficiency raise substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected and we may be unable to continue as a going concern. For example,Future reports from our independent registered public accounting firm may also contain statements expressing substantial doubt about our ability to continue as a going concern. We believe our existing capital resources will be insufficientsufficient to fund our operations beyondthrough 2023. We also expect our expenses to increase as we conduct trials of PoNS Therapy, such as the first half of 2018.PoNSTEP, or if and as we decide to pursue further regulatory approvals, or maintain, expand and protect our intellectual property portfolio. There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our consolidated financial statements, and investors will likely lose all or a part of their investment. Future reports from our independent registered public accounting firm may also contain statements expressing substantial doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all.

Risks Related to the Development and Commercialization of our Product Candidate

We currently only have one product candidate, which is still in development, and we have not obtained authorization from the FDA to commercially distribute the deviceapproved in the United States, a CE MarkU.S. only for commercial distribution in Europe, from Health Canadatreatment of gait deficit, for commercial distributionMS and otherwise only in Canada or from the TGA for commercial distribution in Australia, and we may never obtain such authorizations.Australia.

We currently have no products authorized for commercial distribution. Wedistribution in Europe, or in any other country outside of Canada, the U.S. and Australia. In the U.S. we have not received marketing authorization for use of the PoNS device other than for MS. In addition, the FDA has previously rejected our de novo application for marketing authorization of the PoNS device for mmTBI. In respect of Europe, we are developing the PoNS Treatmentdevice for use in the neuromodulation market, but we cannot begin marketing and selling the device in the United States, Europe Canada or Australia until we obtain applicable authorizations from the FDA, EU, Health Canada or TGA, respectively. We have not yet submitted applications for regulatory authorization in any of these jurisdictions.European Union (Notified Body). The process of obtaining regulatory authorization is expensive and time-consuming and can vary substantially based upon, among other things, the type, complexity and novelty of a product. Changes in regulatory policy, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application may cause delays in the authorization of a product candidate or rejection of a regulatory application altogether. The FDA has substantial discretion in the de novo review and authorization processes and may refuse to accept any application or may decide that our data are insufficient for authorization and require additional pre-clinical, clinical, or other studies. In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit, or prevent marketing authorization from the FDA or other regulatory authorities. Any marketing authorization from the FDA we ultimately obtain may be limited or subject to restrictions or post-market commitments that render the product candidate not commercially viable. If our attempts to obtain marketing authorization are unsuccessful, we may be unable to generate sufficient revenue to sustain and grow our business, and our business, financial condition, and results of operations will be materially adversely affected.

If we are able to complete development of the PoNS device and obtain authorization of the PoNS device for the treatment of chronic balance deficit in patients with mild- to moderate- TBI in the United States, Europe, Canada or Australia, weWe plan to develop the PoNS device for other indications, or symptoms caused by neurological disorders. We woulddisorders, and will be required to commit our own resources to fund development of any other indications and each would require separate FDA authorization.regulatory clearance or other marketing authorization in other territories. The costs of such development efforts and FDA authorizations

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regulatory clearance or other marketing authorization could be substantial and would likely require additional funding, and each such indication would be subject to the same foregoing risks and uncertainties for FDA clearance/authorization.

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We may encounter substantial delays inWorldwide economic and social instability could adversely affect our clinical trials,revenue, financial condition, or our clinical trials may fail to demonstrate the safety and efficacyresults of operations.

The health of the PoNS device toglobal economy, and the satisfaction of applicable regulatory authorities.

Before obtaining marketing authorization from regulatory authorities forcredit markets and the salefinancial services industry in particular, as well as the stability of the PoNS Treatment,social fabric of our society, affects our business and operating results. For example, the credit and financial markets may be adversely affected by the current conflict between Russia and Ukraine and measures taken in response thereto. If the credit markets are not favorable, we must conduct extensive clinical trialsmay be unable to demonstrate the safety and efficacy of the product candidate. Clinical trial are expensive, time consuming and uncertain asraise additional financing when needed or on favorable terms. Our customers may experience financial difficulties or be unable to outcome. We cannot guarantee that clinical trials will be conducted as plannedborrow money to fund their operations, which may adversely impact their ability to purchase our products or completedto pay for our products on schedule,a timely basis, if at all. A failure of one orIn addition, adverse economic conditions, such as recent supply chain disruptions and labor shortages and persistent inflation, have impacted, and may continue to adversely impact our suppliers’ ability to provide our manufacturer with materials and components, which may negatively impact our business. These economic conditions make it more clinical trials can occur at any stage of testing. Delays can be costlydifficult for us to accurately forecast and plan our future business activities.

Worldwide economic and social instability could negativelyadversely affect our ability to complete a clinical trialrevenue, financial condition, or results of operations.

The health of the global economy, and the credit markets and the financial services industry in particular, as well as the stability of the social fabric of our society, affects our business and operating results. For example, the credit and financial markets may allow our competitors to bring products to market beforebe adversely affected by the current conflict between Russia and Ukraineand measures taken in response thereto. If the credit markets are not favorable, we do, which could impair our ability to successfully commercialize the PoNS Treatment. If we are unable to complete clinical trials, or are unsuccessful in doing so, we willmay be unable to advance the PoNS deviceraise additional financing when needed or on favorable terms. Our customers may experience financial difficulties or be unable to regulatory authorizationborrow money to fund their operations, which may adversely impact their ability to purchase our products or to pay for our products on a timely basis, if at all. In addition, adverse economic conditions, such as recent supply chain disruptions and commercialization,labor shortages and persistent inflation, have impacted, and may continue to adversely impact our suppliers’ ability to provide our manufacturer with materials and components, which would harmmay negatively impact our business. These economic conditions make it more difficult for us to accurately forecast and plan our future business financial condition, results of operations.activities.

Our PoNS technology is a new, “untested”novel form of neurostimulation therapy, and the medical community tends not to adopt new therapies very rapidly. If physicians elect not to prescribe the PoNS Treatment,Therapy, or if we cannot train physical therapists in the supervision of the use of the PoNS Treatment,Therapy, we will be unable to generate significant revenue, if any.

Our continued deployment strategy in the civilian population depends on physicians prescribing the PoNS TreatmentTherapy to patients with relevant neurological disorders and physical therapists being trained in the supervision of patients’ use of our treatment. While the effectiveness of our PoNS technology to treat balance disorders related to TBI or any other neurological disorder has not been established in studies conducted in a controlled environment designed to produce scientifically significant results, it remains a new, “untested,” and therefore unproven, treatment. SuchNovel technologies are usually more slowly adopted by the medical community, as the medical community tends to be very conservative. Physicians may elect not to use our products for a variety of reasons, including:

If the medical community is slow to adopt, or declines to adopt our PoNS Treatmentdevice for neurostimulation therapy, we will not be able to generate significant revenues, if any, which would have a material adverse effect on our business.

There is limited market awareness of our product, and the neuromodulation market is new and uncertain.

There is currently limited market awareness of our product. In order to succeed, we must, among other things, increase market awareness of our PoNS TreatmentTherapy and implement a sales and marketing strategy. If we fail in any of these endeavors or experience delays in pursuing them, we will not generate revenues as planned and will need to curtail operations or seek additional financing earlier than otherwise anticipated. In addition, if the neuromodulation market fails to become more integrated in neurological therapy, it could have a materially adverse effect on our business and financial position.

We face significant competition in an environment of rapid technological change, and our competitors may develop devices or products that are more advanced or more effective than ours are which may adversely affect our financial condition and our ability to successfully market the PoNS device.

The neurostimulation market involves rapidly developing technology. Our competitors in the industry are predominantly large companies with longer operating histories, with significantly easier access to capital and other resources and an established product pipeline than us. The combined clinical research and product development done by the industry, including by us and all of our competitors, is foundational, and neurostimulation has slowly become integrated into neurological therapy. This foundation has allowed for new and innovative neurostimulation companies to enter the market. New developments occur rapidly, and we anticipate that we will face increasing competition as new companies enter our market.

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There can be no assurance that we will be able to establish ourselves in the neurostimulation market, or, if established, that we will be able to maintain our market position, if any. Our commercial opportunity may be reduced if our competitors develop new or improved products that are more convenient, more effective or less expensive than our product candidate.candidate is. Competitors also may obtain FDA or other regulatory marketing authorization for their products more rapidly or earlier than we may obtain marketing authorization for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Additionally, technologies developed by our competitors may render the PoNS Treatmentdevice uneconomical or obsolete.

Risks Related to our Reliance on Third Parties

We are, and will continue to be, dependent in significant part on outside scientists and third-party research institutions for our research and development in order to be able to commercialize our product candidate.product.

We currently have a limited number of employees and resources available to perform the research and development necessary to commercialize our PoNS TreatmentTherapy and potential future product candidates. We therefore rely, and will continue to rely, on third-party research institutions, collaborators and consultants for this capability.

Our subsidiary NHC is party Such third-party research institutions, collaborators and consultants may determine to a sole source contract with the U.S. Army. Pursuantcease providing services to the sole source contract, the U.S. Army has agreed to cooperate with NHC on research to determine if the PoNS Treatment can be developed for commercial use in assisting physical therapy in the treatment of soldiers and others with balance disorders resulting from mild- to moderate- TBI; however, NHC is solely responsible for sponsoring the registrational trial and the sole regulatory sponsor for the PoNS treatment for this indication. The Army Laboratories, the inventors and background patent owners of the PoNS device have agreed through a collaborative research and development agreement, or the CRADA to support the execution of clinical studies for the PoNS device as a treatment for other mutually agreed upon military-relevant neurological disorders, which could include tinnitus, PTSD and pain and any subsequent indications identified by the parties. The amount of such support, if any, and the terms of such responsibility to support such clinical studies are not yet negotiated and we have no assurance that we can ultimately reach agreement with the Army Laboratories on such amount or terms of support, and there can be no assurance that the U.S. Army or USAMRMC will not otherwise attempt to renegotiate its responsibilities under the CRADA or the sole-source contractual agreement, respectively. The Army Laboratories may terminate their obligations under the CRADAus at any time, upon 30 days prior written notice to us. If there are insufficient funds available to cover the necessary research and development costs forwhich would delay our product the Army Laboratories could terminate the CRADAdevelopment and cease research and development efforts, which could jeopardize our ability to commercialize our PoNS Treatment.

If we fail to obtain FDA authorization for commercialization of or otherwise fail to ensure that the PoNS device is available for purchase by the U.S. Government by December 31, 2018, we are subject to significant risk of loss of data and proprietary rights and to certain contractual penalties.

Under the CRADA, if we fail to obtain FDA marketing authorization of the PoNS device by December 31, 2018 or otherwise fail to ensure commercialization of the PoNS Treatment is available for purchase by the U.S. Government by December 31, 2021, we may forfeit the right to pursue commercialization on our own. Specifically, in either such case, we will be required to (i) transfer possession, ownership and sponsorship of any regulatory application, and correspondence supporting the PoNS technology to the USAMRMC and (ii) provide the U.S. Government with a non-exclusive, irrevocable license to any patent, copyright, data rights, proprietary information and regulatory information, in order to permit the U.S. Government to pursue commercialization on its own. Any such loss of our ability to exclusively market and sell the PoNS Treatment would have a material adverse effect on our business.  

Additionally, under our Strategic Agreement with A&B (HK) Company Ltd., or A&B, if we fail to obtain FDA marketing authorization for commercialization, or otherwise fail to ensure that the PoNS device is available for purchase by the U.S. Government, by December 31, 2021, we may be required to pay a $2.0 million contract penalty to A&B.commercialization.

We depend on third parties for the manufacture and distribution of our product and the loss of theseour third-party manufacturersmanufacturer and distributor could harm our business.

We will be dependentdepend on our third-party scalecontract manufacturing partner to manufacture and supply our PoNS device for clinical and commercial purposes.  Our newpurposes, and this contract manufacturer will manufacturemanufactured the units for our engineering and device verification testing and will buildis building the launch quantities for our early commercialization. This contract manufacturer also has the capabilityAdditionally, we depend on a different third-party distribution partner to warehouse and ship our products to customers and multiple locations to expand capacity and back-up capabilities.customers. Our reliance on a third-party manufacturersmanufacturer and a distribution provider to supply us with our PoNS device and to provide such other distribution and warranty services exposes us to risks that could delay our sales or result in higher costs or lost product revenues. In addition, our

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manufacturers have experienced and could encountercontinue to experience difficulties, including, but not limited to, those caused by the COVID-19 pandemic, in securing long-lead time components, achieving volume production, quality control and quality assurance or suffer shortages of qualified personnel, which could result in their inability to manufacture sufficient quantities of our commercially available product to meet market demand. Our third-party manufacturer and distributor may alsoor fail to follow and remain in compliance with the FDA-mandated Quality System Regulations, or QSR, compliance which is required for all

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medical devices, or fail to document their compliance to QSRs, eitherany of which could result in their inability to manufacture sufficient quantities of our commercially available product to meet market demand or lead to significant delays in the availability of materials for our product and/or FDA enforcement actions against them and/or us.

If we are unable to obtain adequate supplies of our product that meet our specifications and quality standards, it will be difficult for us to compete effectively. While we have supply and quality agreements in place with our manufacturer, and they may change the terms of our future orders or choose not to supply us with products in the future. Furthermore, if such manufacturer fails to perform theirits obligations, we may be forced to purchase our product from other third-party manufacturers, which we may not be able to do on reasonable terms or in sufficient time, if at all. In addition, if we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. We will also need to obtain FDA approval for any new manufacturers. The delays associated with the verification of a new manufacturer or the reverification of an existing manufacturer could negatively affect our ability to produce and distribute our product in a timely manner.

If the U.S. Army terminates the sole-source cost sharing contract or decides in the future not to purchase our product candidate, we would be forced to find new partners or customers in order to continue advancing the PoNS device.

The U.S. Army is under no obligation to purchase the PoNS device from us. If the U.S. Army were to eventually decide not to purchase our product, we would need to find other buyers for our product. If the U.S. Army were to decline to purchase our product, we may have more difficulty persuading other third parties to purchase our product, which would materially harm our business.

In order to be successful, we must expand our productsproduct lines beyond our single product by commercializing new potential product candidates,PoNS Therapy for gait deficit due to symptoms from MS or balance deficit due to mmTBI, but we may not be able to do so in a timely fashion and at expected costs, or at all.

In order to be successful, we will need to expand our product lines beyond our PoNS TreatmentTherapy for mild-gait deficit due to moderate-TBI, which is currently our only indication for our only product candidate.symptoms from MS or balance deficit due to mmTBI. To succeed in our commercialization efforts, we must effectively continue product development and testing, obtain regulatory authorizations, and enhance our sales, marketing and marketingmarket access and reimbursement capabilities. There is no assurance that we will succeed in developing a future product candidate or in bringing any of our current or potential future product candidates to market.market outside of Canada or the U.S. If we fail in bringing our product candidates to market, or experience delays in doing so, we will not generate revenues as planned and will need to curtail operations or seek additionaladditional financing earlier than otherwise anticipated.

The development of additional products is subject to the risks of failure inherent in the development of new, state of the art products, and products based on new technologies. These risks include: (a) delays in product development or manufacturing; (b) unplanned expenditures for product development or manufacturing; (c) failure of new products to have the desired effect or an acceptable accuracy and/or safety profile; (d) emergence of superior or equivalent products; (e) failure by any potential collaborative partners to successfully develop products; and (f) the dependence on third parties for the manufacture, development and sale of our products. Because of these risks, our research and development efforts or those of potential collaborative partners may not result in any commercially viable products. If a significant portion of these development efforts is not successfully completed, or any products are not commercially successful, we are less likely to generate significant revenues, or become profitable. The failure to perform such activities could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Intellectual Property

If our intellectual property protection is inadequate, competitors may gain access to our technology and undermine our competitive position.

We regard our intended and future intellectual property as important to our success, and we intend to rely on patent law to protect our proprietary rights. Despite our precautions, unauthorized third parties may copy certain portions of our devices or products or reverse engineer or obtain and use information that we regard as proprietary. We may seek additional patents in the future. We do not know if any future patent application will be issued with the scope of the claims we seek, if at all or whether any patents we receive will be challenged or invalidated. Thus, we cannot assure you that any intellectual property rights that we may receive can be successfully asserted in the future or that they will not be invalidated, circumvented or challenged. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent, as do the laws of the United States.U.S. Our means of protecting any proprietary rights we may receive in the United States U.S.

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or abroad may not be adequate and competitors may independently develop a similar technology. Any failure to protect our proprietary information and any successful intellectual property challenges or infringement proceedings against us could have a material adverse effect on our business, financial condition and results of operations.

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We may be subject to various litigation claims and legal proceedings, including intellectual property litigation, such as patent infringement claims, which could adversely affect our business.

We, as well as certain of our directors and officers, may be subject to claims or lawsuits. These lawsuits may result in significant legal fees and expenses and could divert management’s time and other resources. If the claims contained in these lawsuits are successfully asserted against us, we could be liable for damages and be required to alter or cease certain of our business practices or product lines. Any of these outcomes could cause our business, financial performance and cash position to be negatively impacted.

Additionally, our commercial success will also depend, in part, on not infringing on the patents or proprietary rights of others. There can be no assurance that the technologies and products used or developed by us will not infringe such rights. If such infringement occurs and we are not able to obtain a license from the relevant third party, we will not be able to continue the development, manufacture, use, or sale of any such infringing technology or product. There can be no assurance that necessary licenses to third-party technology will be available at all or on commercially reasonable terms. In some cases, litigation or other proceedings may be necessary to defend against or assert claims of infringement or to determine the scope and validity of the proprietary rights of third parties. Any potential litigation could result in substantial costs to, and diversion of, our resources and could have a material and adverse impact on us.

An adverse outcome in any such litigation or proceeding could subject us to significant liabilities, require us to cease using the subject technology or require us to license the subject technology from the third party, all of which could have a material adverse effect on our business.

There are risks to our intellectual property based on our international business operations.

We may face risks to our technology and intellectual property as a result of our conducting business outside of the U.S., including as a result of our strategic arrangement with A&B (and subsequent transfer of assets to CMS and CMS Medical Hong Kong Limited), and particularly in jurisdictions that do not have comparable levels of protection of corporate proprietary information and assets such as intellectual property, trademarks, trade secrets, know-how and customer information and records. While these risks are common to many companies, conducting business in certain foreign jurisdictions, housing technology, data and intellectual property abroad, or licensing technology to joint ventures with foreign partners may have more significant exposure. Pursuant to our agreement with A&B, we transferred ownership of certain of our Asian patents, patent applications, and product support material for the PoNS device from us to A&B and granted to A&B, among other things, an exclusive license to market, promote, distribute and sell the PoNS device solely within specified Asian territories. Subsequently. A&B partnered with other companies in other foreign jurisdictions in connection with the development and manufacturing of the PoNS device, which may expose us to material risks of theft of our proprietary information and other intellectual property, including technical data, manufacturing processes, data sets or other sensitive information. For example, our product or components may be reverse engineered by other business partners or other parties, which could result in our patents being infringed or our know-how or trade secrets stolen. The risk can be by direct intrusion wherein technology and intellectual property is stolen or compromised through cyber intrusions or physical theft through corporate espionage, including with the assistance of insiders, or via more indirect routes.

Risks Related to Government Regulation

Before we can market and sell our products, we will be required to obtain marketing authorization from the FDA and foreign regulatory authorities. These authorizations will take significant time and require significant research, development, and clinical study expenditures, and ultimately may not succeed.

Before we begin to label and market the PoNS TreatmentTherapy for usenew uses in the United States,U.S., we are required to obtain marketing authorization from the FDA under Section 510(k) of the FD&C Act, approval ofvia a de novo reclassification petition classification and clearance request for our product or approval of pre-market approval

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application from the FDA, unless an exemption from pre-market review applies. We intend to utilize the de novo classification procedures to seek marketing authorization for the PoNS device for the treatment of mild- to moderate- TBI, because there is currently no predicate cleared or approved by the FDA for commercial distribution and no existing classification decision by the FDA for such a device. We will also be required to comply with costly and more often time-consuming complianceregulatory requirements by foreign regulatory authorities, including Europe, if we want to sell our products outsidein such regions and countries. While we have marketing authorization for the PoNS Therapy in the U.S. for use as a short term treatment of the United States.gait deficit due to mild-to-moderate symptoms of MS and in Canada for sale as a class II, non-implantable, medical device for treatment of gait deficit due to symptoms from MS and balance deficit due to mmTBI in conjunction with supervised therapeutic exercise, and marketing authorization in Australia, we have not received regulatory authorization or approval in any other region or country for any indication. The process of obtaining regulatory clearancesauthorizations or approvals, or completingincluding completion of the de novo classification process, to market a medical device can be costly and time consuming, and we may not be able to successfully obtain pre-market reviews on a timely basis, if at all.

In April 2019, the FDA declined our request for de novo classification of the PoNS device for use to improve balance in patients with mmTBI. In reaching its conclusion, the FDA noted that it did not have sufficient information to discern the relative independent contributions of the PoNS device and physical therapy to establish sufficient evidence of effectiveness based on our clinical trials. In October 2019, we had a pre-submission meeting where the FDA provided feedback needed to help complete the design of a new clinical trial intended to address the FDA’s request for a trial that demonstrates the benefit of the PoNS Therapy compared to physical therapy alone. In January 2020, we received the FDA’s feedback on the minutes from the October 2019 pre-submission meeting. In its feedback, the FDA provided post-meeting notes with specific recommendations regarding the trial design that were not discussed in the October 2019 pre-submission meeting. Based on the receipt of the FDA’s final minutes from the pre-submission meeting, we are assessing the feasibility of a clinical program to advance the development of a study aimed to obtain clearance for gait and balance deficits in mmTBI if nondilutive financing to fund the program becomes available.

The FDA has substantial discretion in the de novo review process and may refuse to accept any future application(s) or may decide that our data are insufficient to grant the de novo request and require additional pre-clinical, clinical, or other studies. In addition, varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit, or prevent marketing authorization from the FDA or other regulatory authorities.

Moreover, in addition to continuing our pursuit of an indication for stroke and mmTBI with the FDA, we are currently considering the development of the PoNS device for other potential indications, including cerebral palsy, Parkinson’s disease, baby boomers balance, and neurological wellness, as well as expanding the label of our current indications.

If the FDA requires us to go through a lengthier, more rigorous examination for the PoNS Treatmentdevice for mild- to moderate-TBI,any of these indications or any other indications we may pursue, as it has for the PoNS device in the indication for mmTBI, introducing the product could be delayed or canceled, which couldwould cause our launch to be delayed.delayed or cancelled. In addition, the FDA may determine that the PoNS device requires the more costly, lengthy and uncertain pre-market approval process. For example, if the FDA disagrees with our determination that the de novo classification procedures are the appropriate path to obtain marketing authorization for the PoNS device, the FDA may require us to submit a PMA application, which is generally more costly and more burdensome and can take several years from the time the application is submitted to the FDA until an approval is obtained.

Moreover, we are currently developing the PoNS device for other potential indications.  At this time, we do not know what pathways FDA or other regulatory authorities will require us to utilize for these additional indications.  We may be required to pursue marketing authorization via more rigorous pathways, such as a PMA application in the United States, which may require more development work than we are currently planning.  This would delay the potential marketing authorization for such indications, potentially make marketing authorization more difficult to obtain,Obtaining and increase our costs.

Obtainingmaintaining FDA marketing authorization will be costly, may result in time-consuming delays and will subject us to ongoing compliance costs and regulatory risk for non-compliance.

ObtainingEven though we have obtained FDA market clearance for our product as a treatment for MS, obtaining FDA marketing authorization, de novo down-classification, classification and clearance, or PMA approval for medical devices for additional indications can be expensive and uncertain, and generally takes from several months to several years, and generally requires detailed and comprehensive scientific and clinical data. Notwithstanding the expense, these efforts may never result in FDA authorization. Even if we were to obtain regulatory authorization, it may not be for the uses we believe are important or commercially attractive, in which case we would not be permitted to market our product for those uses.

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The FDA can delay, limit or deny authorization of a device for many reasons, including: