UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission file number: File Number: 001-36445
NanoVibronix, Inc.Inc
(Exact name of registrant as specified in its charter)
| Delaware | 01-0801232 | |
(State or other jurisdiction of incorporation | (I.R.S. Employer Identification Number) |
| 525 Executive Blvd.Elmsford, New York | 10523 | |
| (Address of principal executive office) | (Zip Code) |
Registrant’s telephone number, including area code:(914)233-3004
(Former name, former address and
former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| Common stock, par value $0.001 per share | NAOV | NASDAQ Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant has been required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | ||
| Non-accelerated filer | Smaller reporting company | ☒ | |||
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The number of shares outstanding of the registrant’s common stock, par value $0. 001 per share,Common Stock as of November 14, 2017May 15, 2023 was 3,774,756 shares.
NanoVibronix, Inc.
Quarter Ended March 31, 2023
TABLE OF CONTENTS
PART I –- FINANCIAL INFORMATION
NANOVIBRONIX, INC. AND ITS SUBSIDIARYITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 82 | $ | 106 | ||||
| Trade receivables | 29 | 6 | ||||||
| Prepaid expenses and other accounts receivable | 80 | 42 | ||||||
| Inventories | 91 | 67 | ||||||
| Totalcurrent assets | 282 | 221 | ||||||
| NON-CURRENT ASSETS: | ||||||||
| Long-term prepaid expense | 222 | 5 | ||||||
| Severance pay fund | 298 | 257 | ||||||
| Property and equipment, net | 7 | 11 | ||||||
| Total non- current assets | 527 | 273 | ||||||
| Total assets | $ | 809 | $ | 494 | ||||
NanoVibronix, Inc.
Condensed Consolidated Balance Sheets
(Amounts in thousands except share and per share data)
March 31, 2023 | December 31, 2022 | |||||||
| (unaudited) | ||||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash | $ | 1,512 | $ | 2,713 | ||||
| Trade receivables, net | 58 | 9 | ||||||
| Prepaid expenses and other accounts receivable | 782 | 712 | ||||||
| Inventory, net | 2,213 | 2,175 | ||||||
| Total current assets | 4,565 | 5,609 | ||||||
| Noncurrent assets: | ||||||||
| Fixed assets, net | 7 | 7 | ||||||
| Other assets | 5 | 3 | ||||||
| Severance pay fund | 179 | 179 | ||||||
| Operating lease right-of-use assets, net | 55 | 81 | ||||||
| Total non-current assets | 246 | 270 | ||||||
| Total assets | $ | 4,811 | $ | 5,879 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Trade payables | $ | 45 | $ | 66 | ||||
| Other accounts payable and accrued expenses | 2,189 | 2,148 | ||||||
| Deferred revenue | - | 21 | ||||||
| Operating lease liabilities | 55 | 81 | ||||||
| Total current liabilities | 2,289 | 2,316 | ||||||
| Non-current liabilities: | ||||||||
| Accrued severance pay | 223 | 223 | ||||||
| Deferred licensing income | 96 | 107 | ||||||
| Total liabilities | 2,608 | 2,646 | ||||||
| Commitments and contingencies | - | - | ||||||
| Stockholders’ equity: | ||||||||
| Series C Preferred stock of $ par value - Authorized: shares at both March 31, 2023 and December 31, 2022; Issued and outstanding: shares at both March 31, 2023 and December 31, 2022 | - | - | ||||||
| Series D Preferred stock of $ par value - Authorized: shares at both March 31, 2023 and December 31, 2022; Issued and outstanding: shares at both March 31, 2023 and December 31, 2022 | - | - | ||||||
| Series E Preferred stock of $ par value - Authorized: shares at both March 31, 2023 and December 31, 2022; Issued and outstanding: shares at both March 31, 2023 and December 31, 2022 | - | - | ||||||
| Series F Preferred stock of $ par value - Authorized: and shares at both March 31, 2023 and December 31, 2022; Issued and outstanding: shares at both March 31, 2023 and December 31, 2022 | - | - | ||||||
| Preferred stock value | - | - | ||||||
| Common stock of $ par value - Authorized: shares at both March 31, 2023 and December 31, 2022, respectively; Issued and outstanding: and shares at March 31, 2023 and December 31, 2022, respectively | 2 | 2 | ||||||
| Additional paid in capital | 65,708 | 65,634 | ||||||
| Accumulated other comprehensive income | (25 | ) | (18 | ) | ||||
| Accumulated deficit | (63,482 | ) | (62,385 | ) | ||||
| Total stockholders’ equity | 2,203 | 3,233 | ||||||
| Total liabilities and stockholders’ equity | $ | 4,811 | $ | 5,879 | ||||
The accompanying notes are an integral part of the interimthese condensed consolidated financial statements.statements
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (unaudited) | ||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payables | $ | 357 | $ | 82 | ||||
| Other accounts payable | 576 | 483 | ||||||
| Total current liabilities | 933 | 565 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Convertible promissory notes | 1,394 | — | ||||||
| Warrants to purchase Common stock | 2,372 | 2,079 | ||||||
| Accrued severance pay | 399 | 349 | ||||||
| Total long-term liabilities | 4,165 | 2,428 | ||||||
| COMMITMENTS AND CONTINGENT LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIENCY: | ||||||||
| Stock capital - | ||||||||
| Common stock of $ 0.001 par value - Authorized: 24,000,000 shares at September 30, 2017 and December 31, 2016; Issued and outstanding: 2,632,710 shares at September 30, 2017 and December 31, 2016, respectively | 2 | 2 | ||||||
| Series C Preferred stock of $ 0.001 par value - | ||||||||
| Authorized: 5,500,000 shares at September 30, 2017 and December 31, 2016; Issued and outstanding: 1,951,261 shares at September 30, 2017 and December 31, 2016, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 22,448 | 20,073 | ||||||
| Accumulated deficit | (26,741 | ) | (22,576 | ) | ||||
| Total stockholders’ deficiency | (4,289 | ) | (2,499 | ) | ||||
| Total liabilities and stockholders’ deficiency | $ | 809 | $ | 494 | ||||
NanoVibronix, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(Amounts in thousands except share and per share data)
| 2023 | 2022 | |||||||
Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenues | $ | 354 | $ | 272 | ||||
| Cost of revenues | 119 | 166 | ||||||
| Gross profit | 235 | 106 | ||||||
| Operating expenses: | ||||||||
| Research and development | 55 | 66 | ||||||
| Selling and marketing | 214 | 210 | ||||||
| General and administrative | 1,021 | 942 | ||||||
| Total operating expenses | 1,290 | 1,218 | ||||||
| Loss from operations | (1,055 | ) | (1,112 | ) | ||||
| Interest expense | (34 | ) | - | |||||
| Financial income (expense), net | (6 | ) | (13 | ) | ||||
| Loss before taxes on income | (1,095 | ) | (1,125 | ) | ||||
| Income tax expense | (2 | ) | (7 | ) | ||||
| Net loss | $ | (1,097 | ) | $ | (1,132 | ) | ||
| Basic and diluted net loss available for holders of common stock, Series C Preferred Stock and Series D Preferred Stock | $ | (0.67 | ) | $ | (0.81 | ) | ||
| Weighted average common shares outstanding: | ||||||||
| Basic and diluted | 1,651,936 | 1,399,890 | ||||||
| Comprehensive loss: | ||||||||
| Net loss available to common stockholders | (1,097 | ) | (1,132 | ) | ||||
| Change in foreign currency translation adjustments | (5 | ) | (4 | ) | ||||
| Comprehensive loss | (1,102 | ) | (1,136 | ) | ||||
The accompanying notes are an integral part of the interimthese condensed consolidated financial statements.statements
NANOVIBRONIX, INC. AND ITS SUBSIDIARYNanoVibronix, Inc.
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
U.S. dollars(Amounts in thousands (exceptexcept share and per share data)
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | $ | 169 | $ | 180 | $ | 65 | $ | 61 | ||||||||
| Cost of revenues | 56 | 77 | 22 | 27 | ||||||||||||
| Gross profit | 113 | 103 | 43 | 34 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 474 | 447 | 160 | 161 | ||||||||||||
| Selling and marketing | 309 | 390 | 109 | 120 | ||||||||||||
| General and administrative | 1,404 | 741 | 387 | 298 | ||||||||||||
| Total operating expenses | 2,187 | 1,578 | 656 | 579 | ||||||||||||
| Operating loss | (2,074 | ) | (1,475 | ) | (613 | ) | (545 | ) | ||||||||
| Financial expense, net | 1,217 | 208 | 975 | 52 | ||||||||||||
| Loss before taxes on income | (3,291 | ) | (1,683 | ) | (1,588 | ) | (597 | ) | ||||||||
| Taxes on income | 33 | 28 | 11 | 9 | ||||||||||||
| Loss | $ | (3,324 | ) | $ | (1,711 | ) | $ | (1,599 | ) | $ | (606 | ) | ||||
| Deemed dividend related to extension of February 2015 warrants to Common stock in January 2017 | 841 | — | — | — | ||||||||||||
| Total comprehensive loss attributable to holders of Common stock and Preferred C stock | $ | (4,165 | ) | $ | (1,711 | ) | $ | (1,599 | ) | $ | (606 | ) | ||||
| Common stock and Preferred C stock basic and diluted loss per share | $ | (0.91 | ) | $ | (0.37 | ) | $ | (0.35 | ) | $ | (0.13 | ) | ||||
| Weighted average number of shares of Common stock and Preferred C stock used in computing basic and diluted loss per share | 4,583,971 | 4,576,616 | 4,583,971 | 4,582,290 | ||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||||||||||||||||||||
| Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Series F Preferred Stock | Common Stock | Additional Paid - in | Accumulated Other Comprehensive | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Income | Deficit | Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | - | $ | - | - | $ | - | - | $ | - | - | $ | - | 1,399,890 | $ | 1 | $ | 63,189 | $ | 60 | $ | (56,937 | ) | $ | 6,314 | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | 86 | - | - | 86 | ||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | - | - | - | - | - | - | - | - | - | - | - | (6 | ) | - | (6 | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | (1,132 | ) | (1,132 | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | - | $ | - | - | $ | - | - | $ | - | - | $ | - | 1,399,890 | $ | 1 | $ | 63,275 | $ | 54 | $ | (58,069 | ) | $ | 5,262 | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | - | $ | - | - | $ | - | - | $ | - | - | $ | - | 1,641,146 | $ | 2 | $ | 65,634 | $ | (18 | ) | $ | (62,385 | ) | $ | 3,233 | |||||||||||||||||||||||||||||||
| Beginning balance ,value | - | $ | - | - | $ | - | - | $ | - | - | $ | - | 1,641,146 | $ | 2 | $ | 65,634 | $ | (18 | ) | $ | (62,385 | ) | $ | 3,233 | |||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | 67 | - | - | 67 | ||||||||||||||||||||||||||||||||||||||||||
| Exercise of options | - | - | - | - | - | - | - | - | 5,459 | - | 7 | - | - | 7 | ||||||||||||||||||||||||||||||||||||||||||
| Rounding-up of fractional shares due to reverse stock split | - | - | - | - | - | - | - | - | 15,726 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | - | - | - | - | - | (7 | ) | - | (7 | ) | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | (1,097 | ) | (1,097 | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | - | $ | - | - | $ | - | - | $ | - | - | $ | - | 1,662,330 | $ | 2 | $ | 65,708 | $ | (25 | ) | $ | (63,482 | ) | $ | 2,203 | |||||||||||||||||||||||||||||||
| Ending balance, value | - | $ | - | - | $ | - | - | $ | - | - | $ | - | 1,662,330 | $ | 2 | $ | 65,708 | $ | (25 | ) | $ | (63,482 | ) | $ | 2,203 | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the interimthese condensed consolidated financial statements.statements
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
NanoVibronix, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Preferred C stocks | Common stocks | Additional paid-in | Accumulated | Total stockholders’ | ||||||||||||||||||||||||
| Number | Amount | Number | Amount | capital | deficit | deficiency | ||||||||||||||||||||||
| Balance as of January 1, 2016 | 1,951,261 | $ | 2 | 2,611,328 | $ | 2 | $ | 19,521 | $ | (19,734 | ) | $ | (209 | ) | ||||||||||||||
| Issuance of Common stock upon exercise of options | — | — | 12,382 | *) | 33 | — | 33 | |||||||||||||||||||||
| Issuance of Common stock to consultant | — | — | 9,000 | *) | — | — | — | |||||||||||||||||||||
| Stock-based compensation related to options granted to employees | — | — | — | — | 459 | — | 459 | |||||||||||||||||||||
| ASU 2016-09 adoption, Note 2t | — | — | — | — | 11 | (11 | ) | — | ||||||||||||||||||||
| Stock-based compensation related to restricted stock granted to consultant | — | — | — | — | 49 | — | 49 | |||||||||||||||||||||
| Total comprehensive loss | — | — | — | — | — | (2,831 | ) | (2,831 | ) | |||||||||||||||||||
| Balance as of December 31, 2016 | 1,951,261 | $ | 2 | 2,632,710 | $ | 2 | $ | 20,073 | $ | (22,576 | ) | $ | (2,499 | ) | ||||||||||||||
| Stock-based compensation related to options granted to employees | — | — | — | — | 683 | — | 683 | |||||||||||||||||||||
| Issuance of warrants to Common stock | — | — | — | — | 851 | — | 851 | |||||||||||||||||||||
| Deemed dividend related to extension of February 2015 warrants to Common stock in January 2017 | — | — | — | — | 841 | (841 | ) | — | ||||||||||||||||||||
| Total comprehensive loss | — | — | — | — | — | (3,324 | ) | (3,324 | ) | |||||||||||||||||||
| Balance as of September 30, 2017 (unaudited) | 1,951,261 | $ | 2 | 2,632,710 | $ | 2 | $ | 22,448 | $ | (26,741 | ) | $ | (4,289 | ) | ||||||||||||||
(Amounts in thousands except share and per share data)
*) Represents an amount lower than $ 1.
| 2023 | 2022 | |||||||
Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,097 | ) | $ | (1,132 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1 | - | ||||||
| Stock-based compensation | 67 | 86 | ||||||
| Change in fair value of equity investment | (2 | ) | 2 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Trade receivable | (49 | ) | 66 | |||||
| Other accounts receivable and prepaid expenses | (70 | ) | (681 | ) | ||||
| Inventory | (38 | ) | (180 | ) | ||||
| Trade payables | (21 | ) | 85 | |||||
| Other accounts payable and accrued expenses | 41 | 24 | ||||||
| Deferred revenue | (32 | ) | (11 | ) | ||||
| Net cash used in operating activities | (1,200 | ) | (1,741 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property plant and equipment | (1 | ) | - | |||||
| Net cash used in investing activities | (1 | ) | - | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of options | 7 | - | ||||||
| Net cash provided by financing activities | 7 | - | ||||||
| Effects of currency translation on cash and cash equivalents | (7 | ) | (6 | ) | ||||
| Net (decrease) in cash | (1,201 | ) | (1,747 | ) | ||||
| Cash at beginning of period | 2,713 | 7,737 | ||||||
| Cash at end of period | $ | 1,512 | $ | 5,990 | ||||
The accompanying notes are an integral part of the interimthese condensed consolidated financial statements
NANOVIBRONIX, INC.
NanoVibronix, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(Amounts in thousands except share and per share data)
NOTE 1 – DESCRIPTION OF BUSINESS
NanoVibronix, Inc. (the “Company”), a Delaware corporation, commenced operations on October 20, 2003 and is a medical device company focusing on noninvasive biological response-activating devices that target wound healing and pain therapy and can be administered at home, without the assistance of medical professionals.
The Company’s principal research and development activities are conducted in Israel through its wholly owned subsidiary, NanoVibronix (Israel 2003) Ltd., a company registered in Israel, which commenced operations in October 2003.
NOTE 2 – GOING CONCERN AND ITS SUBSIDIARYLIQUIDITY
| Nine months ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Loss | $ | (3,324 | ) | $ | (1,711 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 6 | 6 | ||||||
| Stock-based compensation | 683 | 284 | ||||||
| Benefit component of Promissory Notes | 865 | — | ||||||
| Revaluation of warrants to purchase Common stock | 293 | 191 | ||||||
| Increase in trade receivables | (23 | ) | (6 | ) | ||||
| Increase (decrease) in prepaid expenses and other accounts receivable | (255 | ) | 15 | |||||
| Decrease (increase) in inventories | (24 | ) | 8 | |||||
| Increase in trade payables | 275 | 11 | ||||||
| Increase in other accounts payable | 93 | 95 | ||||||
| Increase in accrued severance pay, net | 9 | — | ||||||
| Net cash used in operating activities | (1,402 | ) | (1,107 | ) | ||||
| Cash flows from investment activities: | ||||||||
| Purchase of property and equipment | (2 | ) | (8 | ) | ||||
| Net cash used in investment activities | (2 | ) | (8 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of Convertible Promissory Notes and warrants | 1,380 | — | ||||||
| Proceeds from exercise of options | — | 33 | ||||||
| Net cash provided by financing activities | 1,380 | 33 | ||||||
| Decrease in cash and cash equivalents | (24 | ) | (1,082 | ) | ||||
| Cash and cash equivalents at the beginning of the period | 106 | 1,614 | ||||||
| Cash and cash equivalents at the end of the period | $ | 82 | $ | 532 | ||||
| Supplemental information and disclosure of non-cash financing transactions: | ||||||||
| Carve out of warrants’ fair value from Convertible Promissory Notes | $ | 852 | $ | — |
The accompanying notes are an integral partCompany’s ability to continue to operate is dependent mainly on its ability to successfully market and sell its products and the receipt of additional financing until profitability is achieved. During the interimfirst quarter of 2023, the Company has incurred losses as well as negative cash outflows from operating activities and expects to incur losses and negative cash outflows from operating activities through fiscal year 2023. Because the Company does not have sufficient resources to fund its operations for the next twelve months from the date of this filing, substantial doubt exists as to the Company’s ability to continue as a going concern.
The Company will need to raise additional capital to finance its losses and negative cash flows from operations and may continue to be dependent on additional capital raising as long as our products do not reach commercial profitability. If the Company is unable to obtain additional financing when it becomes necessary, the development of its product candidates could be impacted and there could be a material adverse effect on the Company’s business and financial condition. These financial statements do not include any adjustments that may result from the outcome of this uncertainty.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The Company’s condensed consolidated financial statements.
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
|
The significant accounting policies applied in the annual consolidated financial statements of the Company as of December 31, 2016 are applied consistently in these financial statements.
The accompanying unaudited consolidated financial statements as of September 30, 2017 have been prepared in accordance with the U.S.accounting principles generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for completethe interim financial statements. information and with instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date.
The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Unaudited interim financial information
In the opinion of management, the accompanying unaudited interim consolidated financial statements includereflect all adjustments, of awhich include only normal recurring natureadjustments, necessary for a fair presentationto state fairly the financial position and results of operations of the Company’sCompany. These condensed consolidated financial position as of September 30, 2017,statements and notes thereto are unaudited and should be read in conjunction with the Company’s consolidated results of operationaudited financial statements for the nine and three monthsyear ended September 30, 2017 andDecember 31, 2022, as found in the Company’s consolidated cash flows forAnnual Report on Form 10-K filed with the nine months ended September 30, 2017.Securities and Exchange Commission (the “SEC”) on April 17, 2023.
ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
The balance sheet for December 31, 2022 was derived from the Company’s audited financial statements for the year ended December 31, 2022. The results of operations for the periods presented are not necessarily indicative of results that could be expected for the entire fiscal year due to seasonality and other factors. Certain information and footnote disclosures normally included in the consolidated financial statements in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC for interim reporting.
Use of estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Foreign currency translation
Non-U.S. dollar denominated transactions and balances have been re-measured to U.S. dollars. All gains and losses from re-measurement of monetary balance sheet items denominated in non-U.S. dollar currencies are reflected in the statements of operations as other comprehensive income, as appropriate. The cumulative translation gains as of the years ended March 31, 2023 and 2022 were $7 and $6, respectively.
Revenue recognition
It is the Company’s policy that revenues from product sales is recognized in accordance with ASC 820 also establishes606 “Revenue Recognition.” Five basic steps must be followed before revenue can be recognized; (1) Identifying the contract(s) with a fair value hierarchycustomer that requirescreates enforceable rights and obligations; (2) Identifying the performance obligations in the contract, such as promising to transfer goods or services to a customer; (3) Determining the transaction price, meaning the amount of consideration in a contract to which an entity expects to maximizebe entitled in exchange for transferring promised goods or services to a customer; (4) Allocating the usetransaction price to the performance obligations in the contract, which requires the company to allocate the transaction price to each performance obligation on the basis of observable inputsthe relative standalone selling prices of each distinct good or services promised in the contract; and minimize(5) Recognizing revenue when (or as) the useentity satisfies a performance obligation by transferring a promised good or service to a customer. The amount of unobservable inputs when measuring fair value. A financial instrument’s categorization withinrevenue recognized is the fair value hierarchyamount allocated to the satisfied performance obligation.
Revenue from product sales is recorded at the net sales price, or “transaction price,” which includes estimates of variable consideration that result from coupons, discounts and distributor fees, processing fees, as well as allowances for returns and government rebates. The Company constrains revenue by considering factors that could otherwise lead to a probable reversal of revenue. Collectability of revenue is reasonably assured based on historical evidence of collectability between the lowest level of input that is significantCompany and its customers.
Revenues from sales to distributors are recognized at the time the products are delivered to the fair value measurement. ASC 820 establishes three levelsdistributors (“sell-in”). The Company does not grant rights of inputs that may be usedreturn, credits, rebates, price protection, or other privileges on its products to measure fair value.distributors.
During February 2013,Recently adopted accounting standards
In June 2016, the Company signed a convertible Promissory Notes agreement (the “Agreement”Financial Accounting Standards Board (“FASB”) pursuant to which the Company issued secured convertible Promissory Notes (the “Notes”Accounting Standards Update (“ASU”) to certain investorsNo. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on February 5, 2013. On each of March 28, 2013, June 3, 2013, August 5, 2013, October 7, 2013, December 9, 2013, February 6, 2014, April 1, 2014, May 15, 2014, June 16, 2014, August 7, 2014, September 7, 2014, October 13, 2014, November 19, 2014Financial Instruments (“ASU 2016-13”) and December 11, 2014, the Agreement and the Notes were amended and restated to increase the principal amount by $100. In addition, with each amendment, the Companyalso issued subsequent amendments to the holdersinitial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of the Note warrants to purchase up to 37,594 shares of common stock in considerationexpected credit losses for an additional $100 per amendment. The exercise price at which the warrants may be exercisedfinancial assets held. This ASU is $2.66 per share, subject to adjustmenteffective for stock splits, fundamental transactions or similar eventsinterim and annual reporting periods beginning after December 15, 2022, including “down round” protection. The warrants expireinterim periods within a period of five years, based on the issuance date.
In April 2015, the holders of the Notes elected to convert the outstanding principal and interest thereunder into shares of the Company’s series C preferred stock. On that date, an aggregate principal balance of $1,500 and $106 in accrued interest were converted into 603,769 shares of series C preferred stock. The shares of series C preferred stock were not registered under the Securities Act of 1933, as amended, or the securities laws of any state, and were offered and sold pursuant to the exemption from registration under the Securities Act of 1933, as amended, provided by Section 3(a)(9) of the Securities Act of 1933, as amended.
those fiscal years. The Company measures the warrants at fair value by applying the Black-Scholes option pricing model in each reporting period until they are exercised or expired, with changes in fair value being recognized in the Company’sadopted ASU 2016-13 as of January 1, 2023, there was no material impact on its condensed consolidated statement of comprehensive loss as financial income or expense.statements.
In estimating the warrants’ fair value, the Company used the following assumptions:
| September 30, | ||||||||
| 2017 | 2016 | |||||||
| Dividend yield(1) | 0% | 0% | ||||||
| Expected volatility(2) | 39.6% - 52.2% | 64.1% - 64.4% | ||||||
| Risk-free interest(3) | 1.13%-1.50% | 0.73%-0.85% | ||||||
| Expected term (years)(4) | 0.3-2.1 | 1.1-3.0 | ||||||
Fair value measurement using significant unobservable inputs (Level 3):
| Fair value of warrants to Common stock | ||||
| Balance at January 1, 2017 | $ | 2,079 | ||
| Change in fair value of warrants | 293 | |||
| Balance at September 30, 2017 | $ | 2,372 | ||
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
NOTE 4 – STOCKHOLDERS’ EQUITY
Effective as
Common stock
The common stock confers upon the holders the right to receive notice to participate and vote in general meetings of January 27, 2017, the Company, entered into amendmentsand the right to receive dividends, if declared, and to participate in the distribution of the surplus assets and funds of the Company in the event of liquidation, dissolution or winding up of the Company.
Reverse Stock Split
On February 8, 2023, the Company effected a reverse stock split of its common stock at a ratio of 1 post-split share for every 20 pre-split shares. The Company’s common stock begin trading on a split-adjusted basis when the market opened on February 9, 2023 (the “Reverse Stock Split”).
At an annual meeting of stockholders held on December 15, 2022, the Company’s stockholders granted the Company’s Board of Directors (the “Board”), the discretion to effect a reverse stock split of the Company’s common stock through an amendment to its two-year warrants (the “Warrant Amendment”)Amended and Restated Certificate of Incorporation at a ratio of not less than 1-for-2 and not more than 1-for-50, with such ratio to purchase an aggregatebe determined by the Board.
At the effective time of 420,000the Reverse Stock Split, every 20 shares of the Company’s issued and outstanding common stock were converted automatically into one issued and outstanding share of common stock at an exercise price of $3.00 per share and warrants to purchase an aggregate of 420,000 shares of common stock at an exercise price of $6.00 per share, issued in January and February 2015, to extend the expiration date of the warrants for two additional years. Pursuant to the Warrant Amendment, warrants to purchase 266,667 shares of common stock at $3.00 per share and warrants to purchase 266,667 shares of common stock at $6.00 per share were to expire on January 29, 2019, and the warrants to purchase 140,000 shares of common stock at $3.00 per share and warrants to purchase 140,000 shares of common stock at $6.00 per share were to expire on February 10, 2019, and the warrants to purchase 13,333 shares of common stock at $3.00 per share and warrants to purchase 13,333 shares of common stock at $6.00 per share were to expire on February 23, 2019. The exercise price and all other terms of the original warrants remain the same. Since substantially all of the warrants to purchase 840,000 shares of common stock subject to the Warrant Amendment are held by the Company’s stockholders, the Warrant Amendment was accounted for as “deemed dividend,” which was measured at the amount equal to the incremental value reflecting thewithout any change in the fairpar value ofper share. Stockholders holding shares through a brokerage account had their shares automatically adjusted to reflect the warrants before1-for-20 Reverse Stock Split. The Reverse Stock Split affected all stockholders uniformly and after the Warrant Amendment. Accordingly, a deemed dividenddid not alter any stockholder’s percentage interest in the amount of $841 was recordedCompany’s equity, except to the Statementextent that the Reverse Stock Split resulted in a stockholder owning a fractional share. Any fractional share of Changes in Stockholders’ Deficiency as an increase in additional paid-in capital with a corresponding increase instockholder resulting from the accumulated deficit.
In March 2017, the Company completed a bridge financing, pursuant to which the Company received from four investors $350 of loans and issuedReverse Stock Split was rounded up to the investors convertible promissory notes (the “2017 Notes”) in an aggregate principal amountnearest whole number of $350 and seven-year warrants (the “Warrants”) to purchase an aggregate of 140,000 shares of common stock at an exercise price of $5.90 per share (the “Exercise Price”) (see Note 6). The Company measured the Warrants at fair value on their issuance date by applying the Black-Scholes options pricing model, accordingshares. Proportional adjustments were made to the following assumptions:
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
In May and June 2017, the Company completed additional bridge financings, pursuant to which the Company received from five investors $680 of loans and issued to the investors 2017 Notes in an aggregate principal amount of $680 and Warrants to purchase an aggregate of 272,000 shares of common stock at the Exercise Price (see Note 6). The Company measured the Warrants at fair value on their issuance date by applying the Black-Scholes options pricing model, according to the following assumptions:
In August and September 2017, the Company completed additional bridge financings, pursuant to which the Company received from two investors $350 of loans and issued to the investors 2017 Notes in an aggregate principal amount of $350 and Warrants to purchase an aggregate of 140,000 shares of common stock at the Exercise Price (see Note 6). The Company measured the Warrants at fair value on their issuance date by applying the Black-Scholes options pricing model, according to the following assumptions:
In addition, the Company’s financial instruments also include cash and cash equivalents, trade receivables, prepaid expenses and other accounts receivable, trade payables and other accounts payable. The fair value of these financial instruments was not materially different from their carrying values as of September 30, 2017 due to the short-term maturities of such instruments.
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
Since March 1, 2017, the Company have completed a series of bridge financings pursuant to which the Company have received from accredited investors aggregate proceeds of $1,380 in exchange for 2017 Notes in the aggregate principal amount of $1,380, and seven-year Warrants to purchase an aggregate of 552,000 shares of common stock at an exercise price of $5.90 per share.
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
The principal amount and all accrued but unpaid interest on the 2017 Notes will become due and payable on the date (the “Maturity Date”) that is the earlier of the (i) 5-year anniversary of the date of issuance, or (ii) the date the Company completes an equity financing pursuant to which the Company issues and sells shares of capital stock resulting in aggregate proceeds of at least $2,000 (a “Qualified Financing”). The 2017 Notes bear interest at a rate of 6% per annum, payable on the Maturity Date. To the extent not previously converted, on the Maturity Date, each investor will receive, at the option of the investor, either (a) cash equal to the original principal amount of the 2017 Notes and interest then accrued and unpaid thereon, or (b) shares of common stock or Series C Convertible Preferred Stock of the Company, at a price per share equal to the lesser of: (x) 80% of the amount equal to the quotient obtained by dividing (i) the estimated value of the Company as of the Maturity Date, as determined in good faith by the Company’s board of directors, by (ii) the aggregate number of outstanding shares of the Company’s common stock asissuable upon exercise or conversion of the Maturity Date on a fully diluted basis,Company’s equity awards, warrants and (y) $5.90other convertible securities, as well as the applicable exercise or conversion price thereof. On February 16, 2023, the Company rounded up fractional shares to its nearest whole number of shares.
All references in this Report to number of shares, price per share as such amount may be adjusted for any stock split, stock dividend, reclassification or similar events affecting the capital stock of the Company. Upon consummation of a Qualified Financing, the investors may elect to have the outstanding principal and accrued but unpaid interest thereon converted into shares of the same class and series of equity securities sold in such Qualified Financing, provided that the investor may elect to receive shares of Series C Convertible Preferred Stock insteadweighted average number of shares of common stock to the extent that common stock are issued in such Qualified Financing, at a price per share equal to the lesser of: (a) 80% of the price per share at which such securities are sold in such Qualified Financing and (b) $5.90 per share, as such amount may be adjusted for any stock split, stock dividend, reclassification or similar events affecting the Company’s capital stock. If there is a change of control and the 2017 Notes have not been previously converted otherwise, the investors may, at their option, (a) receive an amount in cash equal to the sum of the original principal amount of the 2017 Notes and interest then accrued and unpaid thereon, or (b) convert the 2017 Notes and all accrued and unpaid interest thereon into shares of common stock or Series C Convertible Preferred Stock of the Company immediatelyoutstanding prior to the closing of such change of control transactionReverse Stock Split have been adjusted to reflect the Reverse Stock Split on a retroactive basis, unless otherwise noted.
Stock-based compensation and Options
During the three-month period ended March 31, 2023 and 2022, and employee options were exercised, and and options were granted, respectively. The options were granted to employees and board members and were recorded at a price per share equal tofair value and vested over . During the lesser of: (x) 80%three-month periods ended March 31, 2023 and 2022, stock-based compensation expense of the amount equal to the quotient obtained by dividing (i) the estimated$ and $ was recorded for options that vested, respectively.
Shares Under Options | Weighted Average Exercise Price per Share | Weighted Average Remaining Life (Years) | ||||||||||
| Outstanding – December 31, 2021 | 127,000 | $ | 31.86 | |||||||||
| Granted | 6,000 | 15.56 | ||||||||||
| Exercised | - | - | - | |||||||||
| Outstanding – March 31, 2022 | 133,000 | $ | 26.00 | |||||||||
| Outstanding – December 31, 2022 | 147,619 | $ | 24.42 | |||||||||
| Granted | - | - | - | |||||||||
| Exercised | (5,459 | ) | 1.40 | |||||||||
| Outstanding – March 31, 2023 | 142,160 | $ | 25.31 | |||||||||
SCHEDULE OF FAIR VALUE ASSUMPTION FOR OPTIONS GRANTED
| 2022 | ||||
| Price at valuation | $ | |||
| Exercise price | $ | |||
| Risk free interest | ||||
| Expected term (in years) | ||||
| Volatility | ||||
As a result of issuing the warrants and as a result of the discount on the conversion price of the 2017 Notes, the Company recorded in the nine months and three months ended September 30, 2017 a benefit component in the amount of $851 and $214, respectively, to be amortized over the life of the 2017 Notes.
NANOVIBRONIX, INC.
SCHEDULE OF STOCK BASED EXPENSES RECOGNIZED SERVICES FROM EMPLOYEES AND ITS SUBSIDIARYNON-EMPLOYEES
| 2023 | 2022 | |||||||
Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Research and development | 2 | 2 | ||||||
| Selling and marketing | 6 | 6 | ||||||
| General and administrative | 59 | 78 | ||||||
| Total | $ | 67 | $ | 86 | ||||
Stock based compensation
During the nine and three-month period ended September 30, 2017, the Company recorded share based compensation in a total amount of $683 (including the effect of the modification described below) and $147, respectively. During the nine and three-month period ended September 30, 2016 the Company recorded share based compensation in a total amount of $284 and $163, respectively.
In connection with the resignation of a director from the Company's board of directors, on March 30, 2017, the Company amended the option agreement, dated March 25, 2015, the Company entered into an agreement with the resigned director for the grant of an option to purchase 30,000 shares of common stock at an exercise price of $2.57 per share, all of which have vested, and the option agreement, dated July 18, 2016, for the grant of an option to purchase 40,000 shares of common stock at an exercise price of $5.35 per share, all of which were vesting on July 18, 2017, to (i) accelerate the vesting of the option granted to the director in 2016 so that it will be fully vested asAs of March 30, 2017, and (ii) permit the director to exercise the options granted in 2015 and 2016 at any time prior to the expiration of the option period as set forth in the applicable option agreement. This modification resulted in additional share based compensation expense of $98 and $0 in the nine and three months ended September 30, 2017.
As of September 30, 2017,31, 2023, the total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was $845,$, which is expected to be recognized over a weighted average period of approximately 2.8 years.
Warrants
For the three months ended March 31, 2023 and 2022, there were no warrants granted, exercised and/ or cancelled.
SCHEDULE OF WARRANTS ACTIVITY
| Outstanding – December 31, 2021 | 115,467 | |||
| Granted | - | |||
| Exercised | - | |||
| Canceled | - | |||
| Outstanding – March 31, 2022 | 115,467 | |||
| Outstanding – December 31, 2022 | 78,252 | |||
| Granted | - | |||
| Exercised | - | |||
| Canceled | - | |||
| Outstanding – March 31, 2023 | 78,252 | |||
The Company leases office facilities and motor vehicles under operating leases, which expired on various dates, the latest of which expired on July 31, 2017. The Company is renting on a month to month basis and is in discussion with an extension of its lease.
| 8 |
There are no future minimum lease commitments under non-cancelable operating lease agreements as
Basic net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of September 30, 2017.
The Company leases motor vehicles under cancelable lease agreements. The Company has an option to be released from this lease agreement, which may result in penalties in a maximum amountshares of approximately $5.
Rentcommon stock outstanding during the period. All outstanding stock options and related expenses were $20 and $22 for the nine months and $7 and $7warrants for the three months ended September 30, 2017March 31, 2023 and 2016, respectively.
Motor vehicle leases and related expenses were $14 and $12 for the nine months and $5 and $7 for the three months ended September 30, 2017 and 2016, respectively.
|
Under the Company’s subsidiary research and development agreements with the IIA and pursuant to applicable laws, the Company is required to pay royalties at the rate of 3-3.5% of sales of products developed with funds provided by the IIA, up to an amount equal to 100% of the IIA research and development grants received, linked to the dollar including accrued interest at the LIBOR rate. The Company is obligated to repay the Israeli Government for the grants received only to the extent that there are sales of the funded products.
As of September 30, 2017, there are no sales from the funded project and the Company has a contingent obligation to pay royalties in the principal amount of approximately $492. In addition, the IIA may impose certain conditions on any arrangement under which it permits the Company to transfer technology or development out of Israel.
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
All outstanding share options and warrants for the nine and the three months ended September 30, 2017 and 20162022 have been excluded from the calculation of the diluted net loss per share because all such securities are anti-dilutive for all periods presented.
SUMMARY OF COMMON SHARE EQUIVALENTS BEEN EXCLUDED FROM DILUTIVE LOSS PER SHARE AS ANTI-DILUTIVE
| March 31, 2023 | March 31, 2022 | |||||||
| Stock Options – employee and non-employee | 142,160 | 133,000 | ||||||
| Warrants | 78,252 | 115,467 | ||||||
| Total | 220,412 | 248,467 | ||||||
The diluted loss per share equals basic loss per share in the three months ended March 31, 2023 and 2022 because the Company had a net loss and the impact of the assumed exercise of stock options and the vesting of restricted stock would have been anti-dilutive.
NOTE 6 – GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER DATA
The Company manages its business on the basis of one reportable segment and derives revenues from selling its products directly to patients as well as through distributor agreements. The following is a summary of revenues within geographic areas:
SUMMARY OF REVENUE WITHIN GEOGRAPHIC AREAS
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| United States | $ | 63 | $ | 62 | $ | 23 | $ | 26 | ||||||||
| Europe | 58 | 44 | 29 | 6 | ||||||||||||
| Israel | 4 | 11 | 3 | 4 | ||||||||||||
| India | 10 | 24 | 2 | 15 | ||||||||||||
| Rest of the world | 34 | 39 | 8 | 10 | ||||||||||||
| $ | 169 | $ | 180 | $ | 65 | $ | 61 | |||||||||
| 2023 | 2022 | |||||||
Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| United States | $ | 309 | $ | 231 | ||||
| Europe | 19 | 7 | ||||||
| Australia/New Zealand | 13 | 2 | ||||||
| Asia | 1 | 9 | ||||||
| Other | 12 | 23 | ||||||
| Total | $ | 354 | $ | 272 | ||||
DuringFor the nine and three month periodmonths ended September 30, 2017, revenues from distributors accounted for 42% and 52%March 31, 2023, our two largest customers comprised approximately 87% of total revenues. During the nine and three month periodmonths ended September 30, 2016, revenues from distributors accounted for 34% and 36%March 31, 2022, our two largest customers comprised approximately 88% of total revenues.
NOTE 7 – LEASES
The Company has operating lease agreements with terms up to 2-3 years, including car and office space leases.
The Company’s long-lived assets are all located in Israel.weighted-average remaining lease term relating to its operating leases is 0.80 years, with a weighted-average discount rate of 10%.
The Company evaluates events or transactions that occur after the balance sheet date but prior to the issuanceincurred $18 and $7 of financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Forlease expense for its interim consolidated financial statements as of September 30, 2017 (unaudited) andoperating leases for the three months period then ended (unaudited),March 31, 2023 and 2022, respectively.
The following table presents information about the Company evaluated subsequent events through November 14, 2017amount and timing of liabilities arising from the date that the consolidated financial statements were issued.Company’s operating leases as of March 31, 2023:
SCHEDULE OF LIABILITIES ARISING FROM OPERATING LEASES
| 2023 | $ | 54 | ||
| 2024 | 3 | |||
| Total undiscounted operating lease payments | 57 | |||
| Less: Imputed interest | 2 | |||
| Present value of operating lease liabilities | $ | 55 | ||
NANOVIBRONIX, INC. AND ITS SUBSIDIARY
NOTE 8 – OTHER ASSETS
On April 9, 2020, pursuant to a licensing agreement entered into in March 2020, the Company received 10-year warrants to purchase 127,000 shares of Sanuwave Health, Inc. at a price of $0.19 per share. The fair value for warrants received is estimated at the date of grant using a Black-Scholes-Merton pricing model with the following underlying assumptions:
SCHEDULE OF WARRANTS ASSUMPTIONS
| March 31, 2023 | March 31, 2022 | |||||||
| Price at valuation | $ | $ | ||||||
| Exercise price | $ | 0.19 | $ | 0.19 | ||||
| Risk free interest | 3.55 | % | 1.44 | % | ||||
| Expected term (in years) | 7 | 8 | ||||||
| Volatility | 155.6 | % | 138.4 | % | ||||
The Company considers this to be Level 3 inputs and is valued at each reporting period. The fair value of these warrants for the three months ended March 31, 2023 and 2022 was $5 and $3, respectively. There was a net $2 gain and $2 loss change in fair value during the three months ended March 31, 2023 and 2022, respectively.
Financial Instruments Measured at Fair Value on a Recurring Basis
The fair value accounting standards define fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:
| ● | |
| |
| ● | Level 2 inputs: Inputs, other than quoted prices included in Level 1, that are observable either directly or indirectly; and |
| ● | Level 3 inputs: Unobservable inputs for which there is little or no market data, which require the |
|
There were no transfers between Level 3 during the quarters ended March 31, 2023 and 2022.
The following table presents changes in Level 3 asset and liability measured at fair value for the quarters ended March 31, 2023 and 2022:
SCHEDULE OF CHANGES IN LEVEL 3 AND LIABILITY MEASURED AT FAIR VALUE
| Asset | ||||
| Balance – December 31, 2021 | $ | 19 | ||
| Fair value adjustments – Sanuwave warrants | (2 | ) | ||
| Balance – March 31, 2022 | $ | 17 | ||
| Balance – December 31, 2022 | 3 | |||
| Fair value adjustments – Sanuwave warrants | 2 | |||
| Balance – March 31, 2023 | $ | 5 | ||
The following table sets forth the Company’s assets and liabilities which are measured at fair value on a recurring basis by level within the fair value hierarchy:
SCHEDULE OF ASSETS AND LIABILITY MEASURED AT FAIR VALUE
| Level I | Level II | Level III | Total | |||||||||||||
| Fair Value Measurements as of March 31, 2023 | ||||||||||||||||
| Level I | Level II | Level III | Total | |||||||||||||
| Asset: | ||||||||||||||||
| Other assets | $ | - | $ | - | $ | 5 | $ | 5 | ||||||||
| Level I | Level II | Level III | Total | |||||||||||||
| Fair Value Measurements as of December 31, 2022 | ||||||||||||||||
| Level I | Level II | Level III | Total | |||||||||||||
| Asset: | ||||||||||||||||
| Other assets | $ | - | $ | - | $ | 3 | $ | 3 | ||||||||
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Pending litigation
On February 26, 2021, Protrade Systems, Inc. (“Protrade”) filed a Request for Arbitration (the “Request”) with the International Court of Arbitration (the “ICA”) of the International Chamber of Commerce alleging the Company is in breach of an Exclusive Distribution Agreement dated March 7, 2019 (the “Agreement”) between Protrade and the Company. Protrade alleges, in part, that the Company has breached the Agreement by discontinuing the manufacture of the DV0057 Painshield MD device in favor of an updated 10-100-001 Painshield MD device. Protrade claims damages estimated at $3 million.
On March 15, 2022, the arbitrator issued a final award, which, determined that (i) the Company had the right to terminate the Agreement; (ii) the Company did not breach the duty of good faith and fair dealing with regard to the Agreement; and (iii) the Company did not breach any confidentiality obligations to Protrade. Nevertheless the arbitrator determined that the Company did not comply with the obligation to supply Protrade with a year’s supply of patches, and awarded Protrade $1,500,250, which consists of $1,432,000 for “lost profits” and $68,250 as reimbursement of arbitration costs, on the grounds that the Company allegedly failed to supply Protrade with certain patches utilized by users of DV0057 Painshield MD device. The arbitrator based the decision on the testimony of Protrade’s president who asserted that a user would use in excess of 33 patches per each device. The Company believes that the number of patches per device alleged by Protrade is grossly inflated, and that these claims were not properly raised before the arbitrator. Accordingly, on April 13, 2022, the Company submitted an application for the correction of the award which the arbitrator denied on June 22, 2022.
On April 5, 2022, Protrade filed a Petition with the Supreme Court of New York Nassau County seeking to confirm the Award. On April 13, 2022, the Company submitted an application to the ICA seeking to correct an error in the award based on the evidence that the Company only sold 2-3 reusable patches per device contrary to the 33 reusable patches claimed by Protrade. The same arbitrator who issued the award, denied the application.
On July 22, 2022, the Company filed a cross-motion seeking to vacate arbitration award on the grounds that the arbitrator exceeded her authority, that the award was procured by fraud, and that the arbitrator failed to follow procedures established by New York law. In particular, the Company averred in its motion that Protrade’s witness made false statements in arbitration, and that the arbitrator resolved a claim that was never raised by Protrade and that has no factual basis.
On October 3, 2022, the court issued a decision granting Protrade its petition to confirm the Award and denying the cross-motion.
On November 9, 2022, the Company filed a motion to re-argue and renew its cross-motion to vacate the arbitration decision based on newer information that was not available during the initial hearing. On the same day, the Company also filed a notice of appeal with the Appellate Division, Second Department. On March 21, 2023, the Court denied the motion to re-argue and renew. The Company filed a notice of appeal of this decision with the Appellate Division, Second Department on April 5, 2023. The Company intends to perfect the appeals and to continue to vigorously pursue its opposition to the award in all appropriate fora.
As of March 31, 2023 and December 31, 2022, the Company accrued the amount of the award to Protrade amounting to approximately $1.9 million, with the $0.4 million of interest accrued as part of “Interest expense” and “Other accounts payable and accrued expenses” on both periods.
Other Risks
The World Health Organization recently determined that COVID-19 no longer fits the definition of a public health emergency, and the U.S. government has announced its plan to let the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. COVID-19 is expected to remain a serious endemic threat for an indefinite future period and may continue to adversely affect the global economy and have an adverse effect on our ability to access capital, on our business, results of operations and financial condition, and on the market price of our common shares.
NOTE 10 – RELATED PARTY TRANSACTION
The firm of FisherBroyles LLP is handling our Protrade litigation and appeals. For the three months ended March 31, 2023, we have been billed and paid legal fees from FisherBroyles amounting to $76,034 and recorded as part of “General and administrative expenses” in the condensed consolidated statements of operations. As has been previously disclosed, one of our board members, Aurora Cassirer, is a partner at FisherBroyles. Ms. Cassirer does not provide any legal services or legal advice to the Company.
NOTE 11 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of filing this Quarterly Report on Form 10-Q and determined that no material events occurred.
| 11 |
ItemITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and financial condition of NanoVibronix, Inc. (the “Company”) as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2022 and for the year then ended December 31, 2022, which are included in the Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 17, 2023. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read to “us”, “we”, “our” and similar terms refer to the following discussionCompany. This Management’s Discussion and analysisAnalysis of financial conditionFinancial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of operationsthe factors discussed in conjunction with our consolidated financial statements and the related notes thereto included“Risk Factors” elsewhere in this Quarterly Report, on Form 10-Q.in our other reports filed with the SEC, and other factors that we may not know.
Unless the context requires otherwise, references in this Form 10-Q to the “Company,” “NanoVibronix,” “we,” “our” and “us” refer to NanoVibronix, Inc., a Delaware corporation, and its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements,” which include information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
| ● | Our history of losses and expectation of continued losses. | |
| ● | Global economic and political instability and conflicts, such as the conflict between Russia and Ukraine, could adversely affect our business, financial condition or results of operations. | |
| ● | Increasing inflation could adversely affect our business, financial condition, results of operations or cash flows. | |
| ● | The geographic, social and economic impact of COVID-19 on the Company’s business operations. | |
| ● | Our ability to | |
| ● | Regulatory actions that could adversely affect the price of or demand for our approved products. |
| ● | Market acceptance of existing and new products. |
| ● | Favorable or unfavorable decisions about our products from government regulators, insurance companies or other third-party payers. |
| ● | Risks of product liability claims and the availability of insurance. | |
| ● | Our ability to successfully develop and commercialize our products. | |
| ● | Our ability to generate internal growth. | |
| ● | Risks related to computer system failures and cyber-attacks. | |
| ● | Our ability to obtain regulatory approval in foreign jurisdictions. | |
| ● | Uncertainty regarding the success of our clinical trials for our products in development. | |
| ● | Risks related to our operations in Israel, including political, economic and military instability. | |
| ● | The price of our securities is volatile with limited trading volume | |
| ● | Our ability to comply with the continued listing requirements of the NASDAQ capital market. | |
| ● | Our ability to maintain effective internal control over financial reporting and to remedy identified material weaknesses. | |
| ● | We are a “smaller reporting company” and have reduced disclosure obligations that may make our stock less attractive to investors. | |
| ● | Our intellectual property |
| ● | Our ability to recruit and retain qualified regulatory and research and development personnel. |
| ● | Unforeseen changes in healthcare reimbursement for any of our approved products. |
| ● | The adoption of health policy changes and health care reform. | |
| ● | Lack of financial resources to adequately support our operations. |
| ● | Difficulties in maintaining commercial scale manufacturing capacity and capability. |
| ● | Our ability to generate internal growth. |
| ● | Changes in our relationship with key collaborators. |
| ● | Changes in the market valuation or earnings of our competitors or companies viewed as similar to us. |
| ● | Our failure to comply with regulatory guidelines. |
| ● | Uncertainty in industry demand and patient wellness behavior. |
| ● | General economic conditions and market conditions in the medical device industry. |
| ● | Future sales of large blocks of our common stock, which may adversely impact our stock price. |
| ● | Depth of the trading market in our common stock. |
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The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. For a discussion of these and other risks that relate to our business and financial performance, you should carefully review the risks and uncertainties described under the heading “Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K/A10-K for the fiscal year ended December 31, 2016,2022, and those described from time to time in our future reports filed with the Securities and Exchange Commission. Moreover, new risks regularly emerge, and it is not possible for us to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Form 10-Q are based on information available to us on the date of this prospectus.Quarterly Report on Form 10-Q. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Overview
We are a medical device company focusing on noninvasive biological response-activating devices that target wound healing and pain therapy and can be administered at home, without the assistance of medical professionals. Our WoundShield, PainShield and UroShield products are backed by novel technology which relates to ultrasound delivery through surface acoustic waves.
COVID-19
The World Health Organization recently determined that COVID-19 no longer fit the definition of a public health emergency and the U.S. government has announced its plan to let the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. COVID-19 is expected to remain a serious endemic threat for an indefinite future period and may continue to adversely affect the global economy. Our third-party manufacturer, which is based in China, temporarily shut down for sixty days during 2020 due to the pandemic and became fully operational in April 2020 which led to a significant delay in the production of goods needed to fulfill our sales orders which were scheduled to be fulfilled in our first quarter of 2020. We were able to fulfill these orders in the second quarter of 2020. Additionally, the notified regulatory body we rely on to obtain European CE approval is located in Italy and was shut down for approximately six weeks from March to April 2020, which delayed our submission for CE mark approval for the year 2020. The CE Mark approval was subsequently approved in April 2020. COVID-19 has had and may continue to have an adverse effect on the global markets and global economy, including on the availability and pricing of employees, resources, materials, manufacturing and delivery efforts and other aspects of the global economy. During the first six months of 2020, the financial downturn compelled us to furlough or reduce working hours for many of our operating staff, and forced our remaining staff as well as third-party contractors, to work remotely. We also rely on third-party professionals to provide services such as the preparation of our financial statements and to conduct audits, and many of these parties were affected by government-imposed precautionary measures, thereby delaying our receipt of these services. The COVID-19 epidemic is expected to remain a serious endemic threat for an indefinite future period and may continue to adversely affect the global economy and have an adverse effect on our ability to access capital, on our business, results of operations and financial condition, and on the market price of our common shares.
Protrade Proceeding
On February 26, 2021, Protrade Systems, Inc. (“Protrade”) filed a Request for Arbitration (the “Request”) with the International Court of Arbitration (the “ICA”) of the International Chamber of Commerce alleging the Company is in breach of an Exclusive Distribution Agreement dated March 7, 2019 (the “Agreement”) between Protrade and the Company. Protrade alleges, in part, that the Company has breached the Agreement by discontinuing the manufacture of the DV0057 Painshield MD device in favor of an updated 10-100-001 Painshield MD device. Protrade claims damages estimated at $3 million. The Company vigorously defended the claims asserted by Protrade.
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On March 15, 2022, the arbitrator issued a final award, which, determined that (i) the Company had the right to terminate the Agreement; (ii) the Company did not breach the duty of good faith and fair dealing with regard to the Agreement; and (iii) the Company did not breach any confidentiality obligations to Protrade.Nevertheless the arbitrator determined that the Company did not comply with the obligation to supply Protrade with a year’s supply of patches, and awarded Protrade $1,500,250, which consists of $1,432,000 for “lost profits” and $68,250 as reimbursement of arbitration costs, on the grounds that the Company allegedly failed to supply Protrade with certain patches utilized by users of DV0057 Painshield MD device. The arbitrator based the decision on the testimony of Protrade’s president who asserted that a user would use in excess of 33 patches per each device. The Company believes that the number of patches per device alleged by Protrade is grossly inflated, and that these claims were not properly raised before the arbitrator. Accordingly, on April 13, 2022, the Company submitted an application for the correction of the award which the arbitrator denied on June 22, 2022.
On April 5, 2022, Protrade filed a Petition with the Supreme Court of New York Nassau County seeking to confirm the Award. On April 13, 2022, the Company submitted an application to the ICA seeking to correct an error in the award based on the evidence that the Company only sold 2-3 reusable patches per device contrary to the 33 reusable patches claimed by Protrade. The same arbitrator who issued the award, denied the application.
On July 22, 2022, the Company filed a cross-motion seeking to vacate arbitration award on the grounds that the arbitrator exceeded her authority, that the award was procured by fraud, and that the arbitrator failed to follow procedures established by New York law. In particular, the Company averred in its motion that Protrade’s witness made false statements in arbitration, and that the arbitrator resolved a claim that was never raised by Protrade and that has no factual basis.
On October 3, 2022, the court issued a decision granting Protrade its petition to confirm the Award and denying the cross-motion.
On November 9, 2022, the Company filed a motion to re-argue and renew its cross-motion to vacate the arbitration decision based on newer information that was not available during the initial hearing. On the same day, the Company also filed a notice of appeal with the Appellate Division, Second Department. On March 21, 2023, the Court denied the motion to re-argue and renew. The Company filed a notice of appeal of this decision with the Appellate Division, Second Department on April 5, 2023. The Company intends to perfect the appeals and to continue to vigorously pursue its opposition to the award in all appropriate fora.
As of March 31, 2023 and December 31, 2022, the Company accrued the amount of the award to Protrade amounting to approximately $1.9 million, with the $0.4 million of interest accrued as part of “Interest expense” and “Other accounts payable and accrued expenses” on both periods.
Nasdaq Deficiency
On March 2, 2022, the Company received a letter from Nasdaq indicating that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business day period between January 14, 2022, through March 1, 2022, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). The letter also indicated that the Company will be provided with a compliance period of 180 calendar days, or until August 29, 2022 (the “Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A).
On August 30, 2022, the Company received notice from Nasdaq indicating that the Company’s securities would be subject to delisting due to the Company’s continued non-compliance with the minimum bid price requirement unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”). The Company timely requested a hearing before the Panel, which stayed any further action by Nasdaq at least pending the issuance of a decision by the Panel and the expiration of any extension the Panel may grant to the Company following the hearing. On October 17, 2022, the Panel granted the Company’s request for continued listing on The Nasdaq Capital Market until December 15, 2022, subject to the Company providing a written update to the Panel on December 15, 2022.
On September 13, 2022, subject to stockholder approval, the Company’s Board of Directors, (the “Board”), approved an amendment to our Certificate of Incorporation to, at the discretion of the Board, effect the reverse stock split of our common stock at a ratio of 1-for-2 to 1-for-50, with the exact ratio within such range to be determined by the Board at its discretion. The primary goal of the reverse stock split is to increase the per share market price of the Company’s common stock to meet the minimum per share bid price requirements for continued listing on Nasdaq. As indicated by the Company’s proxy statement filed on October 31, 2022, stockholders of the Company’s common stock and Series F Preferred Stock were able to vote on the reverse stock split at the annual meeting held on December 15, 2022.
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At an annual meeting of stockholders held on December 15, 2022, the Company’s stockholders granted Board the discretion to effect a reverse stock split of the Company’s common stock through an amendment to its Certificate of Incorporation at a ratio of not less than 1-for-2 and not more than 1-for-50, such ratio to be determined by the Board.
On February 8, 2023, the Company effected a reverse stock split of its common stock at a ratio of 1 post-split share for every 20 pre-split shares. The Company’s common stock continued to be traded on the Nasdaq Capital Market under the symbol NAOV and began trading on a split-adjusted basis at market open on February 9, 2023 (the “Reverse Stock Split”).
On February 28, 2023, the Company was notified by Nasdaq that it regained compliance with all Nasdaq listing requirements and the matter was closed.
Critical Accounting Policies
A critical accounting policy is one that is both important to the portrayal of our financial condition and results of operation and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies are more fully described in both (i) “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and (ii) Note 23 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K/A10-K for the fiscal year ended December 31, 2016.2022. There have not been any material changes to such critical accounting policies since December 31, 2016.2022.
The currency of the primary economic environment in which our operations are conducted is the U.S. dollar (“$” or “dollar”). Accordingly, our functional currency is the dollar.
Recent Events
Underwritten Public Offering
On November 6, 2017, we closed an underwritten public offering (the “Offering”) of 1,224,488 shares of our common stock (and common stock equivalents), together with warrants (which includes warrants pursuant to the over-allotment option granted to the underwriter) to purchase up to 972,609 shares of common stock at an offering price of $4.90 per share of common stock and accompanying warrant to purchase 0.75 of one share of common stock. Total gross proceeds from the offering totaled approximately $6,000,000, and net proceeds totaled approximately $5,100,000 after deducting underwriting and estimated offering expenses. Each warrant has an exercise price of $6.95 per full share of common stock with a life of five years. We intend to use the net proceeds from this offering: (i) to cover expenses related to listing our shares on The NASDAQ Capital Market; (ii) to expand our sales leadership and field level sales resources; (iii) for research and development; (iv) to implement our Surface Acoustic Wave platform to other applications; (v) to pursue complimentary acquisitions; and (vi) for general working capital. The securities were issued pursuant to our registration statement on Form S-1 originally filed with the Securities and Exchange Commission on June 21, 2017, and declared effective on November 1, 2017.
Conversion of Convertible Promissory Notes
In September 2017, all of the holders of the convertible promissory notes issued in connection with a series of bridge financings between March 1, 2017 and September 15, 2017 (collectively, the “2017 Notes”) agreed to convert the full principal and accrued interest on the 2017 Notes into equity securities of the Company in the event the Company consummated a Qualified Financing any time before December 31, 2017. The Offering constituted a Qualified Financing, and based on the outstanding principal amount and all accrued but unpaid interest on the 2017 Notes at 80% of the offering price of $4.90 per share of common stock and accompanying warrant, we issued an aggregate of 361,462 shares of common stock (and common stock equivalents) and warrants to purchase an aggregate of 271,096 shares of common stock to the holders of the 2017 Notes, all of which are subject to lock-up agreements for 180 days from November 1, 2017.
Results of Operations
NineThree Months Ended September 30, 2017March 31, 2023 Compared to NineThree Months Ended September 30, 2016March 31, 2022
Revenues. For the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, our revenues were approximately $169,000$354,000 and $180,000,$272,000, respectively, a decreasean increase of approximately 6.1%30%, or $11,000,$82,000 between the periods. The decreaseincrease in revenues was mainly attributabledue to decreasedincreased orders from our largest customers (see Note 6), as well as the increase in volume of sales to consumersveteran administration facilities, and to a lesser extent, increased sales of Uroshield due to adding a distributor in the nine months ended September 30, 2017.United Kingdom. Our revenues may fluctuate as we add new consumers or when existing distributors or consumers make large purchases of our products during one period and no purchases during another period. Our revenues may fluctuate from quarter-to-quarter andTherefore, any growth or decrease in revenues by quarter may not be linear or consistent.
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For the ninethree months ended September 30, 2017, the percentage of revenues attributable to our products was: PainShield 81% and UroShield - 19%. For the nine months ended September 30, 2016,March 31, 2023, the percentage of revenues attributable to our products was: PainShield - 89%91% and UroShield - 11%9%. For the ninethree months ended September 30, 2017 and 2016,March 31, 2022, the percentage of revenues attributable to our disposable products was 53%was: PainShield - 99% and 45%, respectively.UroShield - 1%. For the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, the portion of our revenues that was derived from distributors was 42% and 34%, respectively.87% in both quarters.
Gross Profit. For the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, gross profit was approximately $113,000$235,000 and $103,000,$106,000, respectively, an increase of approximately 9.7%,122% or $10,000, between the periods. The increase was$129,000, mainly due to a markdownincreased sales to veteran administration (VA) facilities and hospitals that are sold at higher margins, as well as accounting for patches that were expired and written off, and replacement of obsolete inventory during such periodold components that occurred in 2016.the first quarter of 2022.
Gross profit as a percentage of revenues was approximately 67%66% and 57%39% for the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. The increase in gross profit as a percentage is mainly due to the markdown of obsolete inventory as described above.
Research and Development Expenses. For the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, research and development expenses were approximately $474,000$55,000 and $447,000,$66,000, respectively an increase of approximately 6%, or $27,000, between the periods. The increasedecrease was primarilymainly due to decrease in payments to subcontractors and consultants for our research and development activities during the increase in expenses related to our clinical trials.three months ended March 31, 2023.
Research and development expenses as a percentage of total revenues were approximately 280%16% and 248%24% for the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. The increaseThis decrease was mainly due primarily to the increase in expenses described above.revenues.
Our research and development expenses consist mainly of payroll expenses to employees involved in research and development activities, stock-based compensation expenses, expenses related to subcontracting, patents application and registration, clinical trial and facilities expenses associated with and allocated to research and development activities.
Selling and Marketing Expenses. For the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, selling and marketing expenses were relatively steady totaling approximately $309,000$214,000 and $390,000,$210,000, respectively, a decreaserelatively small increase of approximately 21%2%, or $81,000,$4,000, between the periods. The decrease was mainly due to a decrease in our sales staff and, to a lesser degree, decreased selling and marketing activities, particularly trade show expenses and marketing campaigns as we had to reduce our sales budget due to limited cash resources.
Selling and marketing expenses as a percentage of total revenues were approximately 182%60% and 216%77% for the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. The decrease in our percentage was due primarily to the decreaseincrease in expensesrevenues and the reasons described above.
Selling and marketing expenses consist mainly of payroll expenses to direct sales and marketing employees, stock-based compensation expenses, travel expenses, conventions, advertising and marketing expenses, rent and facilities expenses associated with and allocated to selling and marketing activities.
General and Administrative Expenses. For the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, general and administrative expenses were approximately $1,404,000$1,021,000 and $741,000,$942,000, respectively, an increase of approximately 89%8%, or $663,000,$79,000, between the periods. The increase was mainlyprimarily due to a $223,000 increase in our stock based compensationincreased legal fees related to pending litigations and the increased compensationhigher costs of the new management team hiredon directors & officers (D&O) insurance that started in the fourth quartermid-year of 2016.2022.
General and administrative expenses as a percentage of total revenues were approximately 830%288% and 412%346% for the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, respectively. The increase was due primarily to the increase in expenses described above.
Our general and administrative expenses consist mainly of payroll expenses for management and administrative employees, share-basedstock-based compensation expenses, accounting, legal and facilities expenses associated with general and administrative activities and costs associated with being a publicly traded company.
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Financial Expenses, netInterest expense. For the ninethree months ended September 30, 2017March 31, 2023 and 2016, financial expenses, net2022, interest expense were approximately $1,217,000$34,000 and $208,000, respectively, an increase of approximately 485%, or $1,009,000, between the periods. The increase resulted primarily an additional expense of approximately $865,000 related$0, respectively. This pertains to the issuanceinterest on the Company’s judgment liability for the 1st quarter of the Warrants amortized over the life of the 2017 Notes issued in the first two quarters of 2017 and a $293,000 increase due to a higher valuation adjustment of our warrants that were issued with our 2013 and 2015 convertible promissory notes.2023.
Tax expenses.Income tax expense. For the ninethree months ended September 30, 2017March 31, 2023 and 2016,2022, tax expenses were $33,000$2,000 and $28,000, respectively.$7,000. The tax expense is computed by multiplying income before taxes at our Israeli subsidiary by the appropriate tax rate. The increase in our tax expenses was due to increased spending by our Israel subsidiary.
Loss.Net loss.Our net loss increaseddecreased by approximately $1,613,000,$35,000, or 94%3%, to approximately $3,324,000$1,097,000 for the ninethree months ended September 30, 2017March 31, 2023 from approximately $1,711,000$1,132,000 in the same period of 2016.2022. The increasedecrease in net loss resulted primarily from the factors described above.
Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016Liquidity and Capital Resources
Revenues. ForWe have incurred losses in the amount of approximately $1,097,000 during the three months ended September 30, 2017March 31, 2023, which primarily consisted of increased operating expenses and 2016, our revenues were approximately $65,000 and $61,000, respectively, an increaseincreased interest expense from judgement liability. We also had negative cash flow from operating activities of approximately 7%, or $4,000, between the periods. The increase was attributable to increased sales to our distributors in the three months ended September 30, 2017. Our revenues may fluctuate as we add new consumers or distributors or when existing consumers or distributors make large purchases of our products during one period and no purchases during another period. Our revenues may fluctuate from quarter-to-quarter and any growth or decrease in revenues by quarter may not be linear or consistent.
For the three months ended September 30, 2017, the percentage of revenues attributable to our products was: PainShield - 92% and UroShield - 8%. For the three months ended September 30, 2016, the percentage of revenues attributable to our products was: PainShield - 82% and UroShield -18%. For the three months ended September 30, 2017 and 2016, the percentage of revenues attributable to our disposable products was 45% and 38%, respectively. For the three months ended September 30, 2017 and 2016, the portion of our revenues that was derived from distributors was 52% and 36%, respectively.
Gross Profit. For the three months ended September 30, 2017, gross profit increased by approximately 26%, or $9,000, to approximately $43,000 from approximately $34,000 during the same period in 2016. The increase was due to higher sales as well as a markdown of obsolete inventory.
Gross profit as a percentage of revenues was approximately 65% and 56%$1,200,000 for the three months ended September 30, 2017March 31, 2023. Although we received proceeds from exercise of employee stock options amounting to $7,000 and 2016, respectively. The increase in gross profithad a cash balance of just over $1,512,000 as a percentage is mainly dueof March 31, 2023, we expect to the increased percentage of higher margin sales described above.
Research and Development Expenses. For the three months ended September 30, 2017 and 2016, research and development expenses were approximately $160,000 and $161,000, respectively.
Research and development expenses as a percentage of total revenues were approximately 246% and 264% for the three months ended September 30, 2017 and 2016, respectively. The decrease was due to the increase in revenues.
Our research and development expenses consist mainly of payroll expenses to employees involved in research and development activities, stock-based compensation expenses, expenses related to subcontracting, patents application and registration, clinical trial and facilities expenses associated with and allocated to research and development activities.
Selling and Marketing Expenses. For the three months ended September 30, 2017 and 2016, selling and marketing expenses were approximately $109,000 and $120,000, respectively, a decrease of approximately 9%, or $11,000, between the periods. The decrease was mainly due to a decrease in our sales staff and to a lesser degree decreased selling and marketing activities, particularly marketing expenses as we had to reduce our sales budget due to limited cash resources.
Selling and marketing expenses as a percentage of total revenues were approximately 168% and 196% for the three months ended September 30, 2017 and 2016, respectively. The decrease was due primarily to the decrease in expenses described above.
Selling and marketing expenses consist mainly of payroll expenses to direct sales and marketing employees, stock-based compensation expenses, travel expenses, advertising and marketing expenses, rent and facilities expenses associated with and allocated to selling and marketing activities.
General and Administrative Expenses. For the three months ended September 30, 2017 and 2016, general and administrative expenses were approximately $387,000 and $298,000, respectively, an increase of approximately 30%, or $89,000, between the periods. The increase was mainly due to the increased compensation costs of the new management team hired in the fourth quarter of 2016 including their stock based compensation.
Our general and administrative expenses consist mainly of payroll expenses for management and administrative employees, share-based compensation expenses, accounting, legal and facilities expenses associated with general and administrative activities and costs associated with being a publicly traded company.
Financial Expenses, net. For the three months ended September 30, 2017 and 2016, financial expenses, net were approximately $975,000 and $52,000, respectively, an increase of approximately $923,000, between the periods. The increase resulted from additional expenses incurred from the issuance of the Warrants amortized over the life of the 2017 Notes issued in the first two quarters of 2017 as well as by an increase derived by a higher valuation adjustment of our warrants that were issued with our 2013 and 2015 convertible promissory notes.
Tax expenses. For the three months ended September 30, 2017 and 2016, tax expenses were $11,000 and $9,000, respectively. The tax expense is computed by multiplying income before taxes at our Israeli subsidiary by the appropriate tax rate. The increase in our tax expenses was due to increased spending by our Israel subsidiary.
Loss.Our net loss increased by approximately $993,000, or 163%, to approximately $1,599,000 for the three months ended September 30, 2017 from approximately $606,000 in the same period of 2016. The increase in net loss resulted primarily from the factors described above.
Liquidity and Capital Resources
We continue to incur losses and negative cash flows from operating activities. Weactivities, and therefore, we do not have incurredsufficient resources to fund our operation for the next twelve months from the date of this filing causing us to have substantial doubt of the Company’s ability to continue as a going concern The Company will need to continue to raise additional capital to finance its losses and negative cash flows from operations beyond the next years and may continue to be dependent on additional capital raising as long as our products do not reach commercial profitability. As a result, the Company will be limited in the amount of $3,324,000 (not $3,3242,000)its ability to raise additional capital. If we are unable to raise additional capital, we will need to adjust our business plan and reduce workforce.
During the nine monthsquarter ended September 30, 2017, and through November 14, 2017,March 31, 2023, we met our short-term liquidity requirements from our existing cash reserves and from proceeds from the sales of convertible promissory notes in an aggregate amount of $1,380,000, as well as the net proceeds of $5,100,000 from our underwritten public offering which closed on November 6, 2017.reserves. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products and our development of future products and competing technological and market developments. We expect to continue to incur losses and negative flows from operations. We intend to use thesethe proceeds generated from equity financings, or strategic alliances with third parties, either alone or in combination with equity financing to meet our short-term liquidity requirements as well as to advance our long-term plans. It is our current belief that such proceeds will provide sufficient funding to meet our liquidity needs for the next twelve months. While we believe we have sufficient capital to execute our business plan over the next twelve months, thereThere are no assurances that we will not need to raise additional capital at a later time, or that we would beare able to raise additional capital, ifas required, on terms favorable to us.
We do not have any material commitments to capital expenditures as of September 30, 2017,March 31, 2023, and excepting the $1.9 million owed to Protrade under the court decision, which the Company continues to appeal, we are not aware of any other material trends in capital resources that would impact our business.
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Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
General.
Cash flows
As of September 30, 2017,March 31, 2023, we had cash and cash equivalents of approximately $82,000,$1,512,000, compared to approximately $106,000$2,713,000 as of December 31, 2016. The decrease is attributable primarily to our net cash used in operating activities.2022. We have historically met our cash needs through a combination of issuance of equity, borrowing activities and sales. Our cash requirements are generally for product development, research and development cost, marketing and sales activities, finance and administrative cost, capital expenditures and general working capital.
Cash used in our operating activities was approximately $1,402,000$1,200,000 for the ninethree months ended September 30, 2017March 31, 2023 and $1,107,000$1,741,000 for the same period in 2016. The increase in our cash usage was mainly associated with the increase in our net operating loss for the nine months ended September 30, 2017 compared to the three months ended September 30, 2016, for the reasons described above.2022.
Cash used in investing activities was $2,000 and $8,000 for the nine month periods ended September 30, 2017 and 2016, respectively, and was related to purchases of fixed assets.
Cash provided by financing activities was approximately $1,380,000$7,000 for the ninethree months ended September 30, 2017 derived from proceeds received from the issuance of 2017 Notes and $33,000March 31, 2023 compared to $0 for the ninethree months ended September 30, 2017, which was derived from proceeds from the exercise of certain options.March 31, 2022.
Off BalanceOff-Balance Sheet Arrangements
As of September 30, 2017,March 31, 2023, we have no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Factors That May Affect Future Operations
We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the ordering patterns of our distributors, timing of regulatory approvals, the implementation of various phases of our clinical trials and manufacturing efficiencies due to the learning curve of utilizing new materials and equipment.equipment as well issues that may continue to occur due to the development of the coronavirus outbreak. While there were significant delays in the production of goods due to COVID-19 issues in the past, presently, we are no longer experiencing such delays in the production of our products. That said, there are no assurances that if another wave of the pandemic occurs that we will not experience significant delays in the future. Our operating results could also be impacted by a weakening of the Euro and strengthening of the New Israeli Shekel, or NIS, both against the U.S. dollar. Lastly, other economic conditions we cannot foresee may affect customer demand, such as individual country reimbursement policies pertaining to our products.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2023, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to provide reasonable assurance that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based uponon their evaluation, as of the end of the period covered by this evaluation,Form 10-Q, our chief executive officerChief Executive Officer and chief financial officerChief Financial Officer have concluded that our disclosure controls and procedures are(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were not effective atbecause of the reasonable assurance levelmaterial weaknesses in our internal control over financial reporting as described in Item 9A in our Annual Report on Form 10-K for the fiscal ended December 31, 2022, filed with the SEC on April 17, 2023.
Remediation Efforts to Address Material Weakness
With the oversight of September 30, 2017.senior management and our audit committee, we have taken the steps below and we plan to take additional measures to remediate the underlying causes of the material weakness in our internal control over financial reporting as described in Item 9A in our Annual Report on Form 10-K for the fiscal ended December 31, 2022, filed with the SEC on April 17, 2023:
| ● | With assistance from a current finance and accounting third-party service provider, we are formalizing our risk assessment process, policies and procedures, implementing revised control activities, controls documentation, and ongoing monitoring activities related to the | |
| ● | We have expanded consultations with third party specialists on complex accounting matters, financial | |
| ● | We have enhanced documentation of internal control activities | |
| ● | We have enhanced monitoring of the internal control activities process | |
| ● | We have added an additional level of review to ensure accurate inventory costing and recording |
In addition, under the direction of the audit committee of the Board of Directors, management will continue to review and make necessary changes to the overall design of the Company’s internal control environment, as well as to refine policies and procedures to improve the overall effectiveness of internal control over financial reporting of the Company.
Changes in Internal Control over Financial Reporting
There haveOther than described above in Item 4, there has been no changeschange in the Company’sour internal control over financial reporting that occurred during the three months ended September 30, 2017last fiscal quarter to which this report relates that havehas materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
From time to time, we may be involved in certain claims and litigation that arises througharising out of the normalordinary course and conduct of business. AsManagement assesses such claims and, if it considers that it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated, provisions for loss are made based on management’s assessment of the datemost likely outcome.
On February 26, 2021, Protrade Systems, Inc. (“Protrade”) filed a Request for Arbitration (the “Request”) with the International Court of Arbitration (the “ICA”) of the International Chamber of Commerce alleging the Company is in breach of an Exclusive Distribution Agreement dated March 7, 2019 (the “Agreement”) between Protrade and the Company. Protrade alleges, in part, that the Company has breached the Agreement by discontinuing the manufacture of the DV0057 Painshield MD device in favor of an updated 10-100-001 Painshield MD device. Protrade claims damages estimated at $3 million. The Company vigorously defended the claims asserted by Protrade.
On March 15, 2022, the arbitrator issued a final award, which, determined that (i) the Company had the right to terminate the Agreement; (ii) the Company did not breach the duty of good faith and fair dealing with regard to the Agreement; and (iii) the Company did not breach any confidentiality obligations to Protrade. Nevertheless the arbitrator determined that the Company did not comply with the obligation to supply Protrade with a year’s supply of patches, and awarded Protrade $1,500,250, which consists of $1,432,000 for “lost profits” and $68,250 as reimbursement of arbitration costs, on the grounds that the Company allegedly failed to supply Protrade with certain patches utilized by users of DV0057 Painshield MD device. The arbitrator based the decision on the testimony of Protrade’s president who asserted that a user would use in excess of 33 patches per each device. The Company believes that the number of patches per device alleged by Protrade is grossly inflated, and that these claims were not properly raised before the arbitrator. Accordingly, on April 13, 2022, the Company submitted an application for the correction of the award which the arbitrator denied on June 22, 2022.
On April 5, 2022, Protrade filed a Petition with the Supreme Court of New York Nassau County seeking to confirm the Award. On April 13, 2022, the Company submitted an application to the ICA seeking to correct an error in the award based on the evidence that the Company only sold 2-3 reusable patches per device contrary to the 33 reusable patches claimed by Protrade. The same arbitrator who issued the award, denied the application.
On July 22, 2022, the Company filed a cross-motion seeking to vacate arbitration award on the grounds that the arbitrator exceeded her authority, that the award was procured by fraud, and that the arbitrator failed to follow procedures established by New York law. In particular, the Company averred in its motion that Protrade’s witness made false statements in arbitration, and that the arbitrator resolved a claim that was never raised by Protrade and that has no factual basis.
On October 3, 2022, the court issued a decision granting Protrade its petition to confirm the Award and denying the cross-motion.
On November 9, 2022, the Company filed a motion to re-argue and renew its cross-motion to vacate the arbitration decision based on newer information that was not available during the initial hearing. On the same day, the Company also filed a notice of appeal with the Appellate Division, Second Department. On March 21, 2023, the Court denied the motion to re-argue and renew. The Company filed a notice of appeal of this filing, we are not a partydecision with the Appellate Division, Second Department on April 5, 2023. The Company intends to any material litigation nor are we aware of any such threatened or pending litigation.perfect the appeals and to continue to vigorously pursue its opposition to the award in all appropriate fora.
There are no other material proceedings in which any of our directors, officers or affiliates or any registered or beneficial shareholderstockholder of more than 5% of our common stock, or any associate of any of the foregoing is an adverse party or has a material interest adverse to our interest.
There are numerousThe following description of risk factors includes any material changes to, and varied risks, knownsupersedes the description of, the risk factors addressed below associated with our business, financial condition and unknown, that may prevent us from achieving our goals. You should carefully consider the risks described below and the other information includedresults of operations previously disclosed in this Quarterly Report on Form 10-Q and in“Item 1A. Risk Factors” of our Annual Report on Form 10-K/A10-K for the fiscal year ended December 31, 2016,2022, as filed with the SEC on April 17, 2023. Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price.
The following discussion of risk factor contains forward-looking statements. This risk factor may be important to understanding other statements in this Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes. If anynotes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of the following risks, or any other risks not described below, actually occur, it is likely that our business, financial condition, and/or operating results could be materially adversely affected. In such case, the trading priceFinancial Condition and market valueResults of our common stock could decline and you may lose part or allOperations” of your investment in our common stock. The risks and uncertainties described below include forward-looking statements and our actual results may differ from those discussed in these forward-looking statements.this Form 10-Q.
| 19 |
The Company’s financial statements have been prepared on a going concern basis, and do not include adjustments that might be necessary if the Company is unable to continue as a going concern. Management has substantial doubt about the Company’s ability to continue as a going concern.
The Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the three months ended September 30, 2017, there were no material changesMarch 31, 2023, the Company’s cash used in operations was $1,200 leaving a cash balance of $1,512 as of March 31, 2023. Because the Company does not have sufficient resources to fund our operations for the next twelve months from the date of this filing, management has substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the risk factors previously discussed in Part I, Item 1A “Risk Factors” in our Annual Reportrecoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company will need to raise additional capital to finance its losses and negative cash flows from operations and may continue to be dependent on Form 10-K/A for the year ended December 31, 2016, and Form 10-Q for the quarter ended June 30, 2017, except for the following:
Although our shares of common stock are now listed on the NASDAQ Capital Market, we currently have a limited trading volume, which results in higher price volatility for, and reduced liquidity of, our common stock.
Although our shares of common stock are now listed on the NASDAQ Capital Market under the symbol “NAOV,” trading volume in our common stock has been limited and an active trading market for our shares of common stock may never develop or be maintained. The absence of an active trading market increases price volatility and reduces the liquidity of our common stock. Asadditional capital raising as long as this condition continues,our products do not reach commercial profitability. There are no assurances that the sale of a significant number of shares of common stock at any particular time couldCompany would be difficult to achieve at the market prices prevailing immediately before such shares are offered.
If we cannot continue to satisfy the continuing listing criteria of the NASDAQ Capital Market, the exchange may subsequently delist our common stock.
NASDAQ requires us to meet certain financial, public float, bid price and liquidity standards on an ongoing basis in order to continue the listing of our common stock. Generally, we must maintain a minimum amount of stockholders equity and a minimum number of holders of our securities. If we fail to meet any of the continuing listing requirements, our common stock may be subject to delisting. If our common stock is delisted and we are not able to list our common stockraise additional capital on another national securities exchange, we expect our securities would be quoted on an over-the-counter market.terms favorable to it. If this werethe Company is unsuccessful in commercializing its products and raising capital, it will need to occur, our stockholders could face significant material adverse consequences, including limited availability of market quotations for our common stock and reduced liquidity for the trading of our securities. In addition, we could experience a decreased ability to issue additional securities and obtain additional financing in the future. There can be no assurance that an active trading market for our common stock will developreduce activities, curtail, or be sustained.cease operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
NoneNot Applicable.
See Index to Exhibits.EXHIBIT INDEX
| Exhibit No. | Description | |
| 3.1 | ||
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2* | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 INS* 101 SCH* 101 CAL* 101 DEF* 101 LAB* 101 PRE* 104* | Inline XBRL Instance Document Inline XBRL Taxonomy Extension Schema Document Inline XBRL Taxonomy Calculation Linkbase Document Inline XBRL Taxonomy Extension Definition Linkbase Document Inline XBRL Taxonomy Labels Linkbase Document Inline XBRL Taxonomy Presentation Linkbase Document Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NANOVIBRONIX, INC. | ||
| Date: | By: | /s/ Brian Murphy |
| Name: | ||
| Title: | ||
| Date: May 15, 2023 | By: | /s/ Stephen Brown |
| Name: | Stephen Brown | |