~~[X]~~☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~[ ]~~☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 ~~[X]~~ ☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant has submitted electronically and every Interactive Data File required to be submitted 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 ~~[X]~~ ☒ No ~~[ ]~~☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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).

The number of shares outstanding of the registrant’s Common Stock as of August ~~18, 2020~~16, 2021 was ~~4,988,764~~ 24,109,634 shares.

NanoVibronix, Inc., (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (“Amendment No. 1”) to amend its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, which was filed with the Securities and Exchange Commission (“SEC”), on August 19, 2020 (the “Original Filing”). The Company is filing this Amendment No. 1 to (i) clarify the description of the cash restricted pursuant to a court order in Note 10 – Commitments and Contingencies to Condensed Consolidated Financial Statements and Part II, Item 1. Legal Proceedings, (ii) include a risk factor regarding the Company’s breach of the court order due to the Company’s failure to maintain a sufficient amount of cash held in the Company’s bank accounts, (iii) amend Note 2 – Liquidity and Plan of Operations and Note 5 – Notes Payable to Condensed Consolidated Financial Statements and Part I, Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations to include disclosure that as of June 30, 2020, there was no event of default or violation of a covenant in outstanding notes resulting from the breach of the court order, and (iv) furnish XBRL Exhibits 101 in accordance with Rule 405 of Regulation S-T, which provides the financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, this Amendment No. 1 also includes currently dated certifications from the Company’s principal executive officer and principal financial officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Accordingly, the Exhibit Index in Part II, Item 6. of the Original Filing is also being amended to reflect the filing of the new certifications.

Other than the revisions of the disclosures as discussed above and expressly set forth herein, this Amendment No. 1 continues to speak as of the filing date of the Original Filing and does not reflect any events that may have occurred subsequent to such date.

	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
ASSETS:
Current assets:
Cash and cash equivalents	$	-		$	1,338		$	5,672		$	7,142
Restricted cash		202						-			391
Trade receivables		257			111			36			25
Other accounts receivable and prepaid expenses		158			268			671			267
Inventory		148			121			205			145
Total current assets		765			1,838			6,584			7,970

Non-current assets:
Fixed assets, net		3			4			5			4
Other assets		32			-			23			25
Severance pay fund		209			194			198			199
Operating lease right-of-use assets, net								22			31
Total non-current assets		244			198			248			259
Total assets	$	1,009		$	2,036		$	6,832		$	8,229

LIABILITIES AND STOCKHOLDERS’ EQUITY:

Current liabilities:
Trade payables	$	136		$	129		$	181		$	144
Other accounts payable and accrued expenses		189			280			147			488
Common stock payable		844			-
Notes payable to a related party, net of discount of $123		77			-
Notes payable, current		4			-
Deferred revenues								53			-
Shares issued in excess of authorized								-			2,257
Operating lease liabilities - current								10			13
Total current liabilities		1,250			409			391			2,902

Non-current liabilities:
Accrued severance pay		279			279		$	241			245
Deferred licensing income		226			-			176			199
Notes payable, non-current		38			-
Derivative liabilities								1,848			2,471
Operating lease liabilities, non-current								12			18
Total liabilities		1,793			688			2,668			5,835

Commitments and contingencies (Note 10)
Commitments and contingencies (Note 9)								-

Stockholders’ equity:
Series C Preferred stock of $0.001 par value - Authorized: 3,000,000 shares at June 30, 2020 and December 31, 2019; Issued and outstanding: 2,993,142 and 2,733,142 at June 30, 2020 and December 31, 2019		2			2
Series C Preferred stock of $0.001 par value - Authorized: 3,000,000 shares at June 30, 2021 and December 31, 2020; Issued and outstanding: 666,667 at June 30, 2021 and December 31, 2020								1			1

Series D Preferred stock of $0.001 par value - Authorized: 506 shares at June 30, 2020 and December 31, 2019; Issued and outstanding: 304 at June 30, 2020 and December 31, 2019		-			-
Series D Preferred stock of $0.001 par value - Authorized: 506 shares at June 30, 2021 and December 31, 2020; Issued and outstanding: 153 at June 30, 2021 and December 31, 2020								-			-

Series E Preferred stock of $0.001 par value - Authorized: 1,999,494 shares at June 30, 2020 and December 31, 2019, respectively; Issued and outstanding: 1,715,000 and 1,825,000 at June 30, 2020 and December 31, 2019, respectively		2			2
Series E Preferred stock of $0.001 par value - Authorized: 1,999,494 shares at June 30, 2021 and December 31, 2020, respectively; Issued and outstanding: 875,000 at June 30, 2021 and December 31, 2020								1			1

Common stock of $0.001 par value - Authorized: 20,000,000 shares at June 30, 2020 and December 31, 2019; Issued and outstanding: 4,313,764 and 4,203,764 shares at June 30, 2020 and December 31, 2019, respectively		5			5
Common stock of $0.001 par value - Authorized: 24,109,635 shares at June 30, 2021 and December 31, 2020; Issued and outstanding: 24,109,634 and 21,246,523 shares at June 30, 2021 and December 31, 2020, respectively								24			22

Additional paid in capital		39,935			39,669			51,867			44,959
Accumulated other comprehensive income								59			66
Accumulated deficit		(40,728	)		(38,330	)		(47,788	)		(42,655	)
Total stockholders’ equity		(784	)		1,348			4,164			2,394
Total liabilities and stockholders’ equity	$	1,009		$	2,036		$	6,832		$	8,229

The accompanying notes are an integral part of these condensed consolidated financial statements

Series C
Preferred Stock

Series D
Preferred Stock

Series E
Preferred Stock

Common
Stock

Additional
Paid - in

Accumulated
Total Stockholders’
Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Equity
Balance, December 31, 2019 2,993,142 $ 2 304 $        —   1,825,000 $ 2 4,203,764 $ 5 $ 39,669 $ (38,330 ) $ 1,348
Stock-based compensation —   —   —   —   —   —   —   —   143 —   143
Exchange of Series E Preferred Stock into Common Stock —   —   —   —   (110,000 ) —   110,000 —   —   —   —
Warrants issued with notes payable —   —   —   —   —   —   —   —   123 —   123
Net loss —   —   —   —   —   —   —   —   —   (2,398 ) (2,398 )
Balance, June 30, 2020 2,993,142 $ 2 304 $ —   1,715,000 $ 2 4,313,764 $ 5 $ 39,935 $ (40,728 ) $ (784 )

The accompanying notes are an integral part of these condensed consolidated financial statements

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.

The Company’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. The Company currently incurs and historically has incurred losses from operations and expects to do so in the foreseeable future. ~~In 2020, the~~The Company ~~raised $200 through the issuance of notes payable~~has historically had recurring losses and negative cash used from ~~a related party and received $42 from the Paycheck Protection Program. Despite the recent financing, the Company will not have sufficient resources to fund its~~ operations ~~for the next twelve months from the date of this filing. These conditions raise~~which raised substantial doubt about the Company’s ability to continue as a going concern. During the six months ended June 30, 2021, the Company used $2,870 of cash in operations. Although we expect to continue to incur losses and negative cash flows from operating activities, we had cash balances of $5,672 as of June 30, 2021. Because the Company has sufficient resources to fund our operation for the next twelve months ~~management expects that~~from the date of this filing, the substantial doubt has been alleviated. The Company ~~will~~may need to continue to raise additional capital to finance its losses and negative cash flows from operations beyond the next twelve months and may continue to be dependent on additional capital raising as long as ~~its~~our products do not reach commercial profitability.

~~In connection with the lawsuit filed by the Company’s former officer and director~~ If we are unable to increase in the ~~Haifa Israel District Financial Court, the Company was required by the court~~number of authorized shares of our common stock, we will be unable to ~~keep $350,000 of cash restricted. See Note 10 – Commitments and Contingencies – Legal Proceedings. Subsequent to the imposition of this requirement, the Company failed to maintain~~issue common stock or convertible instruments. As a sufficient amount of cash to comply with the court order. As of June 30, 2020, there was no event of default or violation of a covenant in outstanding notes resulting from the breach of the court order.

Management’s plans include the continued commercialization of the Company’s products and raising capital through the sale of additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances, however, thatresult, the Company will be ~~successful~~limited in ~~obtaining the level of financing needed for~~ its ~~operations. If the Company is unsuccessful in commercializing its products and raising capital, it will need~~ability to reduce activities, curtail or cease operations. The financial statements do not include any adjustments with respect to the carrying amounts of assets and liabilities and their classification that might be necessary should the Company be unable to continue as a going concern.raise additional capital.

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“USU.S. GAAP”) for the interim financial 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. The terms “we,” “us,” “our,” and the “Company” refer to NanoVibronix, Inc. and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position and results of operations of the Company. These consolidated financial statements and notes thereto are unaudited and should be read in conjunction with the Company’s audited financial statements for the year ended December ~~31,2019,~~31, 2020, as found in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on ~~May 20, 2020.~~April 15, 2021.

The balance sheet for December 31, ~~2019~~2020 was derived from the Company’s audited financial statements for the year ended December 31, ~~2019.~~2020. 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.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company believe 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.

Cash consists of funds on hand and held in bank accounts. Cash equivalents includes demand deposits placed with banks or other financial institutions and all highly liquid investments with original maturities of three months or less. Restricted cash of $202 represents cash restricted per a court order which resulted from a dispute between the Company and a former officer and director, see Note 10.

Non-U.S. dollar denominated transactions and balances have been re-measured to U.S. dollars. All ~~transaction~~ 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 ~~financial~~other comprehensive income, ~~or expenses,~~ as appropriate. ~~Gains and losses from foreign currency~~The cumulative translation ~~for~~gains as of the ~~six months~~years ended June 30, 2021 and 2020 were $7and ~~2019 were $6 and $28,~~$6, respectively.

It is the Company’s policy that revenues from product sales is recognized in accordance with ASC 606 “Revenue Recognition.” Five basic steps must be followed before revenue can be recognized; (1) Identifying the contract(s) with a customer that creates 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 be entitled in exchange for transferring promised goods or services to a customer; (4) Allocating the transaction 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 the relative standalone selling prices of each distinct good or services promised in the contract; and (5) Recognizing revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer. The amount of revenue recognized is the amount allocated to the satisfied performance obligation. Adoption of ASC 606 has not changed the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s financial statements.

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, chargebacks and distributor fees, processing fees, as well as allowances for returns and government rebates. The Company constrains revenue by giving consideration to 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 Company and its customers. ~~See Note 7 for a detailed breakout of revenue.~~

Revenues from sales to distributors are recognized at the time the products are delivered to the distributors (“sell-in”). The Company does not grant rights of return, credits, rebates, price protection, or other privileges on its products to distributors.

When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. We measure our investment in equity securities at fair value on a recurring basis. The Company’s equity securities are valued using inputs observable in active markets and are therefore classified as Level 1 within the fair value hierarchy.

~~In February 2016,~~The Company adopted a sequencing policy under ASC 815-40-35 whereby if reclassification of contracts from equity to liabilities is necessary pursuant to ASC 815 due to the ~~FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize~~Company’s inability to demonstrate it has sufficient authorized shares. This was due to the ~~assets and~~Company committing more shares than authorized. While temporary suspensions are in place to keep the potential exercises beneath the number authorized, certain instruments are classified as liabilities, ~~that arise from operating leases. A lessee should recognize in~~after allocating available authorized shares on the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginningbasis of the ~~earliest period presented using~~most recent grant date of potentially dilutive instruments. Pursuant to ASC 815, issuances of securities granted as compensation in a ~~modified retrospective approach. Public business entities should apply~~share-based payment arrangement are not subject to the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The Company (as an EGC) that is taking advantage of the extended transition period offered to private entities would apply this for fiscal years beginning after December 15, 2021. The Company does not believe that the adoption will have a material effect on the Company’s condensed interim consolidated financial statements and related disclosures.sequencing policy.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt this ASU for fiscal years beginning after December 15, ~~2022,~~2021, including interim periods within those fiscal years. The adoption of Topic 326 isdid not ~~expected to~~ have a material on the Company’s financial statements and financial statement disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”, which adds disclosure requirements to Topic 820 for the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Although the Company adopted ASU 2018-13 on January 1, 2020, there was no material impact on the financial statements.

The common stock confers upon the holders the right to receive notice to participate and vote in general meetings of the Company, and 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.

As of December 3, 2020, we had 20,000,000authorized shares of our common stock and 19,850,014 shares of common stock outstanding resulting in 149,986shares of common stock being available for issuance. On December 4, 2020, certain holders of the Company’s Series C Preferred Stock converted 396,509 shares of Series C Preferred Stock into 396,509 shares of common stock, resulting in an overissue of 246,523 shares of common stock. Beginning on December 17, 2020, through January 22, 2021, certain holders of warrants we had issued in December 2020 (the “December 2020 Warrants”) exercised a portion of the December 2020 Warrants for 2,657,144 shares of Common Stock, resulting in an additional overissue of 2,657,144 shares of Common Stock. As of December 31, 2020, the aggregate number of shares of common stock that was overissued by the Company was 4,109,634. The shares issued in excess of the authorized amount are classified as liabilities. The common stock equivalents are subject to the Company’s sequencing policy and are classified as derivative liabilities (see Note 5). On March 3, 2021, the Company filed a proxy statement in connection with a special meeting of stockholders to be held on March 31, 2021 to (i) ratify the increase in the number of authorized shares of common stock from 20,000,000 to 24,109,635 and the issuance of such 4,109,635 shares of common stock, and (ii) further increase the number of our authorized shares of common stock. On May 6, 2021, the Company’s stockholders voted to approve the ratification of the increase in the number of authorized shares of common stock from 20,000,000 to 24,109,635 and the issuance of such 4,109,635 shares of common stock to be effective as of December 4, 2020 but the stockholders did not approve a further increase in the number of its authorized shares of common stock. We have filed with the Secretary of State of the State of Delaware a Certificate of Validation with respect to the Share Increase Ratification and such Certificate of Validation has become effective.

During the six-month period ended June 30, 2021 and 2020, 180,000and ~~2019,~~ 15,000 ~~and 120,000~~ options were granted, respectively.

The options were granted ~~in 2020 were~~ to a ~~non-employee~~employees and consultants in 2021 and were recorded at a fair value ~~of $14 and vest quarterly over 12 months. The options granted in 2019 were to a non-employee and were recorded at a fair value of $183~~ and vested ~~immediately.~~over three years. During the three and six-month period ended June 30, 2021, stock-based compensation expense of $99 and $208 was recorded for options that vested, respectively. During the three and six-month period ended June 30, 2020, there was stock-based compensation expense of ~~$72~~$72 and ~~$143,~~$143, respectively. During the ~~three and six-month period ended June 30, 2019, there was stock-based compensation expense~~second quarter of ~~$111 and $1,446, respectively.~~2021, 13,845 options expired.

The fair value for options granted in ~~the 2020~~2021 is estimated at the date of grant using a Black-Scholes-Merton options pricing model with the following underlying assumptions:

The total stock-based expense recognized in the financial statements for services received from employees and non-employees is shown in the following table.

SCHEDULE OF STOCK BASED EXPENSES RECOGNIZED FOR SERVICES FROM EMPLOYEES AND NON-EMPLOYEES

As of June 30, ~~2020,~~2021, the total unrecognized estimated compensation cost related to non-vested stock options granted prior to that date was ~~$122,~~$194, which is expected to be recognized over a weighted average period of approximately ~~0.62~~0.99 years.

Each share of Series E Preferred Stock is convertible at any time and from time to time at the option of a holder of Series E Preferred Stock into one share of the Company’s common stock, provided that each holder would be prohibited from converting Series E Preferred Stock into shares of the Company’s common stock if, as a result of such conversion, any such holder, together with its affiliates, would own more than 9.99% of the total number of shares of the Company’s common stock then issued and outstanding. This limitation may be waived with respect to a holder upon such holder’s provision of not less than 61 days’ prior written notice to the Company.

On December 2, 2020, we entered into a ~~shareholder converted 110,000~~Securities Purchase Agreement with certain institutional and accredited investors pursuant to which the Company issued and sold to such investors in a private placement an aggregate of (i) 5,914,285 shares of ~~Series E Preferred Stock into 110,000~~the Company’s common stock at an offering price of $0.70 per share and (ii) pre-funded warrants to purchase up to 2,657,144 shares of common stock at a ~~conversion rate~~purchase price of 1$0.699 per pre-funded warrant, for gross proceeds of approximately $6.0 million, and net proceeds of approximately $5.4 million. In January 2021, two investors exercised an aggregate of 1,657,144 warrants at $0.001 per share.

On January 21, 2021, Company entered into letter agreements (the “Letter Agreements”) with certain existing accredited investors to ~~1. No~~exercise certain outstanding warrants (the “Existing Warrants”) to purchase ~~was made in order~~up to ~~convert these shares.~~

an aggregate of 1,205,968 shares of the Company’s common stock at an exercise price per share of $1.165 (the “Exercise”). Certain of the Existing Warrants (the “Registered Existing Warrants”) and the shares of common stock underlying the Registered Existing Warrants have been registered pursuant to a registration statement on Form S-3 (File No. 333-251264) and a registration statement on Form S-1 (File No. 333-218871). In ~~May 2020,~~consideration for the exercise of the Existing Warrants for cash, the exercising holders received new unregistered warrants to purchase up to an aggregate of 1,205,967 shares of common stock (the “New Warrants”) at an exercise price of $1.04 per share and with an exercise period of seven years from the initial closing date. The gross proceeds to the Company from the Exercise were approximately $1.4 million.

The New Warrants were accounted for in warrant modification expense, which was ~~granted a loan (the “PPP Loan”)~~measured at the amount equal to the incremental value reflecting the change in the fair value of the warrants before and after the Warrant Amendment. Accordingly, warrant modification expense in the amount of ~~$42, pursuant to~~$1,627 was recorded with a corresponding increase in additional paid in capital.

In estimating the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief, and Economic Securities (“CARES”) Act, which was enacted March 27, 2020. The application for these funds requiredwarrants’ fair value, the Company ~~to, in good faith, certify that~~used the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further required the Company to consider its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The Company made this good faith assertion based upon the adverse impact the COVID-19 pandemic had on its business and the global economy. While the Company has made this assertion in good faith based upon all available guidance, management will continue to assess their continued qualification if and when updated guidance is released by the Treasury Department. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria.following assumptions:

The PPP Loan, which was in the form of a note that was granted on May 14, 2020, matures in two years and accrues interest at a rate of 1.00% per annum, payable in monthly payments commencing six months after loan disbursement. The Company also has the option to negotiate with the lender to extend the maturity date to up to five years. The note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs and any payments of certain covered interest, lease and utility payments. The Company intends to use the entire PPP Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. The ultimate forgiveness of the PPP Loan is also predicated upon regulatory authorities concurring with management’s good faith assessment that the current economic uncertainty made the loan request necessary to support ongoing operations. If, despite the Company’s good-faith belief that given the circumstances the Company satisfied all eligibility requirements for the PPP Loan, the Company is later determined to have violated any applicable laws or regulations or it is otherwise determined that the Company was ineligible to receive the PPP Loan, the Company may be required to repay the PPP Loan in its entirety and/or be subject to additional penalties. In the event the PPP Loan, or any portion thereof, is forgiven, the amount forgiven is applied to outstanding principal

During 2020, the Company ~~issued and sold~~established a sequencing policy to ~~a related party an unsecured promissory note in the principal amount of $200,~~ which ~~accrues interest at 10% per annum and matures in one year. In addition~~common stock equivalents are exercisable to ~~the promissory note, the Company granted a seven-year equity warrant to purchase 100,000~~ shares of common stock more than the Company’s ~~common stock. The exercise price for each warrant share is equal to $2.50,~~authorized limit. It was determined that all options and warrants by the ~~warrants may also be exercised, in whole or in part, by means of a cashless exercise. The warrants were recognized as a debt discount and is amortized over the life~~end of the ~~note. The warrants~~year were no longer permitted to be classified as equity and were valued at ~~$123~~fair market value using a Black Scholes ~~Merton pricing model~~and recorded as derivative liabilities.

On April 6, 2021, the Company agreed to buy back 663,332 warrants from investors for a total of $368. The warrants had exercise prices between $0.88 and $0.94 per share. The value of the derivative liabilities associated with ~~the following underlying assumptions:~~

Inthese warrants was $451. The Company recorded a $64 gain in connection with the ~~lawsuit filed by~~buy back of the warrants.

A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s ~~former officer~~purchase warrants that were categorized within Level 3 of the fair value hierarchy during the quarter ended June 30, 2021 is as follows:

SUMMARY OF QUANTITATIVE INFORMATION TO VALUATION METHODOLOGY AND UNOBSERVABLE INPUTS

The foregoing assumptions were reviewed quarterly and ~~director~~were subject to change based primarily on management’s assessment of the probability of the events described occurring.

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:

There were no transfers between Level 3 during the ~~Haifa Israel District Financial Court,~~three and six months ended June 30, 2021.

The following table presents changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2021.

The Company ~~was required by~~has operating lease agreements with terms up to 3 years, including car leases.

The Company’s weighted-average remaining lease term relating to its operating leases is 2.92 years, with a weighted-average discount rate of 10%.

The Company incurred $4and $10 of lease expense for its operating leases for the ~~court to keep $350,000~~three months and six months ended June 30, 2021, respectively.

The following table presents information about the amount and timing of ~~cash restricted. See Note 10 – Commitments and Contingencies – Legal Proceedings. Subsequent to~~liabilities arising from the ~~imposition of this requirement, the Company failed to maintain a sufficient amount of cash to comply with the court order. As~~Company’s operating leases as of June 30, ~~2020, there was no event of default or violation of a covenant in outstanding notes resulting from the breach of the court order.~~2021:

Basic net loss per common share (“Basic EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. All outstanding stock options and warrants for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 have been excluded from the calculation of the diluted net loss per share because all such securities are anti-dilutive for all periods presented.

The following table summarizes the Company’s securities, in common stock equivalents, which have been excluded from the calculation of dilutive loss per share as their effect would be anti-dilutive:

SUMMARY OF COMMON SHARE EQUIVALENTS BEEN EXCLUDED FROM DILUTIVE LOSS PER SHARE AS ANTI-DILUTIVE

The diluted loss per share equals basic loss per share in the three and six months ended June 31, 2021 and 2020 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.

June 30, 2020 June 30, 2019
Series D Preferred Stock 303,782 303,782
Series E Preferred Stock 1,715,000 1,600,000
Stock Options - employee and non-employee 1,571,332 749,361
Warrants 266,667 266,667
Total 3,856,781 2,919,810

The Company manages its business on the basis of ~~one~~1 reportable segment and derives revenues from selling its products directly to patients as well as through distributor ~~and licensing~~ agreements. The following is a summary of revenues within geographic areas:

~~During the three-month period ended June 30, 2020 and 2019, revenues from distributors accounted for 88% and 40% of total revenues, respectively.~~

~~During the six-month period ended June 30, 2020 and 2019, revenues from distributors accounted for 91% and 50% of total revenues, respectively.~~

On April 9, 2020, pursuant to a licensing agreement entered into in March 2020, the Company received ~~10-year~~10-year warrants to purchase 127,000 shares of Sanuwave Health, Inc. at a price of ~~$0.19~~$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:

The Company considers this to be level 3 inputs and is valued at each reporting period. The fair value of these warrants ~~on April 9, 2020 and June 30, 2020 was $23 and $32, respectively. The change in fair value for~~decreased by $2 during the six months ended June 30, ~~2020 was $9.~~

~~On February 11, 2019, the Company entered into~~2021, leaving a ~~consulting agreement (the “Agreement”) with Bespoke Growth Partners, Inc. (“Bespoke”), pursuant to which, amongst other things, Bespoke was entitled to receive up to 650,000 shares~~balance of common stock of the Company, of which 275,000 shares were issued on the date of signing. On August 5, 2020, the Company paid $75 and issued an additional 375,000 shares of common stock to Bespoke under the Agreement. Such issuance was undertaken in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Rule 506 of Regulation D promulgated thereunder. As of June 30, 2020, 375,000 shares of common stock, valued at $2.25 per share, or $844, was owed to Bespoke.$22.

~~The Company leases office facilities and motor vehicles under operating leases, which expire on various dates, the latest of which is 2020.~~

~~Rent and related expenses were $13 and $25, for the three and six months ended June 30, 2020, respectively, and $15 and $27 for the three and six months ended June 30, 2019, respectively.~~

On March 12, 2020, the World Health Organization declared COVID-19 to be a pandemic, and the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could 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.

On ~~March 27, 2020,~~February 26, 2021, Protrade Systems, Inc. (“Protrade”) filed a Request for Arbitration (the “Request”) with the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100%International Court of ~~taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each~~Arbitration (the “ICA”) of the ~~five preceding taxable years to generate a refund~~International Chamber of previously paid income taxes. The Company has been consistently in a loss position in the U.S. and at present does not expect that the NOL carryback provision of the CARES Act would result in a material cash benefit to the Company.

~~In June 2020,~~Commerce alleging the Company ~~experienced a cybersecurity incident. Specifically, the Company believes that one or two unauthorized third parties were able to use~~is in breach of an email domain similar to the Company’s to convince two of the Company’s customers to send payments in the aggregate amount of approximately $308 to unauthorized bank accounts that should have been sent toExclusive Distribution Agreement dated March 7, 2019 (the “Agreement”) between Protrade and the Company. ~~The total amount of customer payments has been recovered and received by the Company.~~

~~We are subject to a lawsuit filed by our former officer and director, Jona Zumeris, on December 17, 2019~~Protrade alleges, in the Haifa Israel District Financial Court, seeking damages of approximately $900,000 for breach of the Separation Agreement executed on July 4, 2018, and to which matter both parties have agreed to proceed to settle in mediation scheduled to begin in late May 2020. We believepart, that a major part of the allegations included in the suit are without merit, however, due to the uncertainties of litigation or mediation, we can give no assurance that we will be able to reach reasonable settlement, or if it were to proceed in court, prevail on the claims made against us in such lawsuit. The Israeli court issued a court order demanding that we restrict approximately $700,000 of the Company’s money until the matter is adjudicated. The Company appealed the court order. In February 2020, the Company agreed to restrict approximately $350,000 and agreed to try to settle the matter in mediation which commenced in May 2020. The cash restriction is relating to this dispute is reflected on the balance sheet as “restricted cash.” The court required such amount restricted and separated in the Company’s bank savings account; however, the Company’s bank accounts do not have any restrictions in place which prohibit the Company from using its available funds at its discretion. The Company did not have sufficient amount of cash to comply with the court order and only had restricted cash of $202,000 in its bank account as of June 30, 2020. Following June 30, 2020, the Company has ~~used its available funds, including most~~breached the Agreement by discontinuing the manufacture of the ~~restricted cash,~~DV0057 Painshield MD device in ~~order~~favor of an updated 10-100-001 Painshield MD device. Protrade claims damages estimated at $3 million. As of the date of this report, the parties have respectively submitted the initial Request for Arbitration and Response to ~~fund its operations. A settlement was~~Request for Arbitration with Counterclaims, and agreed on a procedural timeline pursuant to which final resolution of the arbitration is expected by February 2022 (if not ~~reached in May and although the mediation process has not yet concluded, the~~dismissed or settled earlier). The Company believes ~~that~~ it is too early to determine the most likely outcome. The Company disputes the claims asserted by Protrade and ~~will now likely go~~intends to ~~trial, although no date has been set.~~respond to the Request and defend against the claims vigorously.

~~In July 2020, the Company granted 122,000 options to board members and 50,000 options to a non-employee consultant.~~

On July 7, 2020, a shareholder converted 300,000 shares of Series E Preferred Stock into 300,000 shares of common stock at a conversion rate of 1 to 1. No purchase was made in order to convert these shares.

On September 14, 2018, the Company received a letter from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was no longer in compliance with the minimum stockholders’ equity requirement for continued listing on the Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain stockholders’ equity of at least $2.5 million (the “Equity Requirement”).

Following a hearing on May 2, 2019, a Nasdaq Hearings Panel was appointed to review the Company’s compliance with the Equity Requirement, and on August 5, 2020, the Staff issued a letter to the Company in which it indicated that, since the Company had failed to report stockholders’ equity of at least $2.5 million in each of its last three periodic reports filed with the Securities and Exchange Commission, its common shares would be subject to delisting on August 14, 2020, unless the Company requests an appeal of this determination by 4:00 p.m. Eastern Time on August 12, 2020 (the “Hearing Request”).

The Company submitted a Hearing Request on August 12, 2020 and a hearing has been scheduled for September 10, 2020. The Hearing Request will automatically stay any suspension or delisting action pending a decision of a Nasdaq Hearings Panel. At the hearing, the Company will provide the Nasdaq Hearings Panel with an update on its compliance plan and, if necessary, request a further extension of time in which to regain compliance. Pursuant to the Nasdaq Listing Rules, the Nasdaq Hearings Panel has the discretion to grant an additional extension of time of up to 180 calendar days, as measured from August 5, 2020.

There can be no assurance that the Company’s plan will be accepted by the Nasdaq Hearings Panel or that, if it is, the Company will be able to regain compliance with the applicable Nasdaq listing requirements. If the Company’s common stock is delisted, it could be more difficult to buy or sell the Company’s common stock or to obtain accurate quotations, and the price of the Company’s common stock could suffer a material decline. Delisting could also impair the Company’s ability to raise capital.

ITEM 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.~~NanoVibronix, Inc. (the “Company”) as of June 30, ~~2020~~2021 and for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 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, ~~2019~~2020 and for the year then ended, which are included in the Form 10-K filed with the Securities and Exchange Commission (“SEC”) on ~~May 20, 2020.~~April 15, 2021. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”, “we”, “our” and similar terms refer to the Company. This Management’s Discussion and Analysis of Financial 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 the factors discussed in “Risk Factors” elsewhere in this Quarterly Report, in our other reports filed with the SEC, and other factors that we may not know.

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:

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 for the fiscal year ended December 31, ~~2019,~~2020, 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 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.

We are a medical device company focusing on ~~non-invasive~~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.

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not “emerging growth companies” including, but not limited to:

We intend to take advantage of these and other exemptions available to “emerging growth companies.” We could remain an “emerging growth company” until the earliest of (a) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock in an offering registered under the Securities Act of 1933, as amended, (b) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (c) the last day of our fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, or Exchange Act (which would occur if the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter), or (d) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.

The JOBS Act permits an “emerging growth company” like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. This means that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to delay such adoption of new or revised accounting standards.

In December 2019, a strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China, and has reached multiple other countries, resulting in government-imposed quarantines, travel restrictions and other public health safety measures in China and other affected countries. The ongoing COVID-19 pandemic has and may continue to adversely impact our business, as our operations are based in and rely on third parties located in countries affected by the ~~outbreak.~~pandemic. Our third-party manufacturer, which is based in China, temporarily shut down for sixty days due to the ~~outbreak~~pandemic and became fully operational in April 2020 which led to a significant delay in the production of goods needed to ~~fulfil~~fulfill our sales orders, which were scheduled to be fulfilled in our first quarter of 2020. We were able to ~~fulfil~~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 ~~has been~~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 was subsequently approved in April 2020. The various precautionary measures taken by many governmental authorities around the world in order to limit the spread of 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. The financial downturn ~~has~~ compelled us to furlough or reduce working hours for much of our operating staff for several months during the second quarter of 2020, and has forced our remaining staff as well as third-party contractors ~~and our clients may encounter cash-flow issues that will delay their payments~~ to ~~us.~~work remotely. In addition, ~~remaining~~many staff members ~~have been forced~~continue to operate remotely from their homes from time to time as government regulations fluctuate, which is continuing to result in delays in obtaining certain financial ~~records.~~records and may cause production delays in the foreseeable future. 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 have been affected by government-imposed precautionary measures, thereby delaying our receipt of these services. Such government-imposed precautionary measures may have been relaxed in certain countries or states, but there is no assurance that more strict measures will be put in place again due to a resurgence in COVID-19 cases. Therefore, the COVID-19 pandemic has and may again disrupt production and cause delays in the supply and delivery of our products, may continue to affect our operation, may further divert the attention and efforts of the medical community to coping with COVID-19 and disrupt the marketplace in which we operate and may have a material adverse effect on our operations. Assessment of the complete extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. The continuation of the COVID-19 pandemic could materially disrupt our business and operations, hamper our ability to raise additional funds or sell or securities, continue to slow down the overall economy, curtail consumer spending, interrupt our sources of supply, and make it hard to adequately staff our operations.

Effective as of January 2020, the ~~Company experienced~~U.S. Centers for Medicare and Medicaid Services (“CMS”) approved our PainShield™ for reimbursement for Medicare beneficiaries on a ~~cybersecurity incident. Specifically,~~national basis. We were notified on March 30, 2020 that our Medicare Enrollment Application was approved, and we are now an approved Medicare Supplier for Durable Medical Equipment, or DME through the ~~Company believes~~National Supplier Clearinghouse, Palmetto-GBA as well as Noridian Administrative Services, LLC, the two Medicare Administrative Contractors that one or two unauthorized third parties were able to use an email domain similar to the Company’s to convince two of the Company’s customers to send payments in the aggregate amount of approximately $308,000 to unauthorized bank accounts that should have been sent to the Company. Both customers were able to reclaim the fraudulent transfers and subsequently deposited them into the Company’s bank account; $78,000 was paid in Junehandle DME reimbursement nationwide. PainShield is currently available for Medicare reimbursement on a national level under new HCPCS (Healthcare Common Procedure Coding System) code K1004.

~~The Company’s management notified the appropriate government authorities and is exploring~~we signed a ~~range of steps to enhance its security protections and prevent future unauthorized activity. We have not incurred, nor do we expect to incur significant costs related to investigating this incident.~~

~~Effective June 22, 2020, the Company entered into a two-year exclusive~~license agreement with ~~Ultra Pain Products,~~Sanuwave Health, Inc. for the manufacture and delivery of our WoundShield technology. Under the terms of the agreement, received warrants to purchase 127,000 shares of Sanuwave stock, a $250,000 milestone payment based on receipt of U.S. Food and Drug Administration approval, and 10% royalty on Sanuwave’s gross revenues from sales or rentals of WoundShield. In return, Sanuwave has received the worldwide, exclusive rights to our WoundShield product and technology. In addition, Sanuwave will bear the costs and clinical validation responsibilities associated with obtaining approval for WoundShield from the U.S. Food and Drug Administration and other regulatory agencies around the world.

In September 2020, the U.S. FDA exercised its Enforcement Discretion to allow distribution of ~~the Company’s proprietary PainShield™ devices and components through and by Durable Medical Equipment (DME) Distributors throughout~~our UroShield device in the United States. This temporary authorization is limited to use as an extracorporeal acoustic wave generating accessory to urological indwelling catheter for use during the COVID-19 pandemic.

On ~~September 14, 2018,~~April 21, 2021, the Company received ~~a letter~~notice from the Listing Qualifications ~~Staff~~Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) ~~notifying~~indicating that the Company ~~that it was~~ no longer ~~in compliance with~~satisfied the minimum $2.5 million stockholders’ equity requirement for continued listing on ~~the~~The Nasdaq Capital ~~Market.~~Market under Nasdaq Listing Rule 5550(b)(1) ~~requires listed companies to maintain~~(the “Equity Requirement”). The Company reported stockholders’ equity of ~~at least $2.5~~approximately $2.4 million ~~(the “Equity Requirement”).~~

~~Following~~in its Annual Report on Form 10-K as of and for the fiscal year ended December 31, 2020 and did not otherwise satisfy the alternative criteria pertaining to market value of listed securities or net income. In accordance with the Nasdaq Listing Rules, the Company was granted a ~~hearing on May 2, 2019, a Nasdaq Hearings Panel was appointed~~period of 45 calendar days, or through June 7, 2021, to ~~review the Company’s~~submit its plan to evidence compliance with the Equity Requirement ~~and on August 5, 2020,~~for the ~~Staff issued a letter to~~Staff’s review. On May 24, 2021, the Company ~~in which it indicated that, since~~filed its Quarterly Report on Form 10-Q for the ~~Company had failed to report~~first quarter of 2021 and reported stockholders’ equity of ~~at least $2.5 million in each of its last three periodic reports filed with the Securities and Exchange Commission, its common shares would be subject to delisting on August 14, 2020, unless~~approximately $4.3 million. On June 1, 2021, the Company ~~requests an appeal of~~was notified by Nasdaq that the Company regained compliance with Nasdaq’s listing qualifications and that this ~~determination by 4:00 p.m. Eastern Time on August 12, 2020 (the “Hearing Request”).~~matter was now closed.

On June 17, 2021, the Company received a letter from the Listing Qualifications Department of the Nasdaq indicating that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business day period between May 5, 2021, through June 16, 2021, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on The ~~Company submitted a Hearing Request on August 12, 2020 and a hearing has been scheduled for September 10, 2020.~~Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). The ~~Hearing Request will automatically stay any suspension or delisting action pending a decision of a Nasdaq Hearings Panel. At the hearing,~~letter also indicated that the Company will ~~provide the Nasdaq Hearings Panel~~be provided with ~~an update on its~~a compliance ~~plan and, if necessary, request a further extension~~period of ~~time~~180 calendar days, or until December 14, 2021, in which to regain ~~compliance. Pursuant~~compliance pursuant to ~~the~~ Nasdaq Listing ~~Rules,~~Rule 5810(c)(3)(A). The letter further provided that if, at any time during the 180-day period, the closing bid price of the Company’s common stock was at least $1.00 for a minimum of 10 consecutive business days, Nasdaq ~~Hearings Panel has~~would provide the ~~discretion to grant an additional extension of time of up to 180 calendar days, as measured from August 5, 2020.~~Company with written confirmation that it had achieved compliance with the minimum bid price requirement.

On August 9, 2021, the Company received a letter from Nasdaq notifying the Company that for the last 10 consecutive business days, from July 26, 2021 to August 6, 2021, the closing bid price of the Company’s common stock has been at $1.00 per share or greater, and, therefore, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) and this matter is now closed.

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 3 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. There have not been any material changes to such critical accounting policies since December 31, ~~2019.~~2020.

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.

Three Months Ended June 30, ~~2020~~2021 Compared to Three Months Ended June 30, ~~2019~~2020

Revenues. For the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, our revenues were approximately ~~$269,000~~$318,000 and ~~$263,000~~$269,000 respectively, an increase of approximately 2%18%, or ~~$6,000~~$49,000 between the periods. The increase was due to increased sales of our PainShield devices to our distributors. 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. Therefore, any growth or decrease in revenues by quarter may not be linear or consistent.

For the three months ended June 30, 2021 and 2020, the percentage of revenues attributable to our products was: PainShield - 100% and UroShield 0%. For the three months ended June 30, ~~2019, the percentage of revenues attributable to our products was: PainShield - 64%~~2021 and ~~UroShield - 36%. For the three months ended June 30,~~ 2020, ~~and 2019, the percentage of revenues attributable to our disposable products was 4% and 2%, respectively. For the three months ended June 30, 2020 and 2019,~~ the portion of our revenues that was derived from distributors was ~~88%~~96% and ~~40%~~88%, respectively.

Gross Profit. For the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, gross profit was approximately $208,000 and $38,000, ~~and $207,000,~~ respectively, ~~a decrease~~an increase of approximately ~~82%~~447% or ~~$169,000,~~$170,000, mainly due to ~~an agreement with a distributor where~~sales of our products to distributors at higher margins in 2021 as compared to the same period last year due to increased prices charged to our distributors and also because the Company ~~sold roughly $112,000 of~~did not offer special discounts in 2021 on products as was done in the ~~second quarter of 2020 at a steep discount in order to gain entry into a new market. The Company has since discontinued selling further products to this distributor.~~same fiscal period during 2020.

Gross profit as a percentage of revenues was approximately ~~14%~~65% and ~~79%~~14% for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~decrease~~increase in gross profit as a percentage is mainly due to the ~~reason~~reasons described above.

Research and Development Expenses. For the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, research and development expenses were approximately ~~$16,000~~$64,000 and ~~$150,000,~~$16,000, respectively between the periods. The ~~decrease~~increase was mainly due to ~~there being no clinical trials~~options expense during the three months ended June 30, ~~2020~~2021, as well as increased payroll costs in 2021 compared to the ~~furloughing of our~~same period last year as we furloughed staff ~~members~~ in the second quarter of 2020 due to the impacts of the COVID-19 pandemic.

Research and development expenses as a percentage of total revenues were approximately 6%20% and ~~57%~~6% for the three months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

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 June 30, ~~2020~~2021 and ~~2019,~~2020, selling and marketing expenses were approximately $296,000 and $180,000, ~~and $271,000,~~ respectively, ~~a decrease~~an increase of approximately ~~34%~~64%, or ~~$91,000,~~$116,000, between the periods. The ~~decrease~~increase was primarily due to ~~a significant reduction in sales~~increased salaries and ~~marketing activities including related traveling or conventions attended during the first quarter of 2020 as well as a temporary reduction of salaries placed~~consulting fees during the second quarter of 2021 as we furloughed staff, or reduced salaries in the second quarter of 2020 ~~both~~ due to the impacts of the COVID-19 pandemic.

Selling and marketing expenses as a percentage of total revenues were approximately ~~67%~~93% and ~~103%~~67% for the three months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

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 three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, general and administrative expenses were approximately $839,000 and $1,310,000, ~~and $682,000,~~ respectively, ~~an increase~~a decrease of approximately ~~92%~~36%, or ~~$628,000,~~$471,000, between the periods. The ~~increase~~decrease was primarily due to the settlement with ~~Bespoke~~a contractor in 2020 for $918,750, partially offset by fees related to a ~~$208,000 decrease in professional fees~~lawsuit and our efforts to ratify our prior over issuances of ~~approximately $197,000 in 2020 compared to $405,000 in 2019~~common stock, as well as ~~a temporary reduction of~~incurring larger salary expenses in 2021 as we furloughed staff, or reduced salaries ~~placed during~~in the second quarter of 2020 due to the impacts of the COVID-19 pandemic.

General and administrative expenses as a percentage of total revenues were approximately ~~487%~~264% and ~~259%~~487% for the three months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

Our general and administrative expenses consist mainly of ~~the settlement with Bespoke,~~ payroll expenses for management and administrative employees, stock-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,~~income (expense), net. For the three months ended June 30, 2021 and 2020, ~~and 2019,~~ financial ~~expenses,~~income (expense), net was approximately ~~$5,000~~$1,000 compared to a ~~$24,000,~~financial expense, net of $5,000 , respectively, ~~a decrease~~an increase of approximately ~~$19,000,~~$6,000 between the ~~periods. The decrease~~periods due to the change in ~~2020 was derived primarily from exchange rate adjustments.~~fair value of the investment in Sanuwave.

Change in fair value of derivative liabilities. For thethree months ended June 30, ~~2020~~2021 and ~~2019,~~2020, there was a change in fair value of derivative liabilities resulting in a gain of approximately $0$706,000 and ~~$107,000,~~$0, respectively. The ~~income~~gain in ~~2019~~2021 was derived from the ~~valuation~~Company’s total potentially dilutive shares exceed the Company’s authorized share limit.

~~Loss on extinguishment of derivative liability~~warrants. . For the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, there was a ~~loss on extinguishment~~gain of approximately $64,000 and $0, respectively. The gain was related to the settlement of derivative ~~liability~~liabilities which was the result of ~~approximately $0 and $288,000, respectively. The loss in 2019 was derived~~the repurchase of warrants from ~~the extinguishment of embedded derivative liabilities upon repayment of its related debt.~~certain investors.

Tax ~~expenses.~~benefit (expense). For the three months ended June 30, 2021 and 2020, ~~and 2019,~~there was a tax ~~expenses were~~benefit of $4,000 and ~~$6,000.~~$4,000 tax expense. The tax expense or benefit is computed by multiplying income before taxes at our Israeli subsidiary by the appropriate tax rate.

Net loss. Our net loss ~~increased~~decreased by approximately ~~$370,000,~~$1,261,000 or ~~33%~~85%, to approximately ~~$1,477,000~~$216,000 for the three months ended June 30, ~~2020~~2021 from approximately ~~$1,107,000~~$1,477,000 in the same period of ~~2019.~~2020. The decrease in net loss resulted primarily from the factors described above.

Six Months Ended June 30, ~~2020~~2021 Compared to Six Months Ended June 30, ~~2019~~2020

Revenues. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, our revenues were approximately ~~$383,000~~$421,000 and ~~$342,000~~$383,000 respectively, an increase of approximately ~~12%~~10%, or ~~$41,000~~$38,000 between the periods. The increase was due to increased sales of our PainShield devices to our distributors. 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. Therefore, any growth or decrease in revenues by quarter may not be linear or consistent.

For the six months ended June 30, 2021 and 2020, the percentage of revenues attributable to our products was: PainShield - 100% and UroShield 0%. For the six months ended June 30, ~~2019, the percentage of revenues attributable to our products was: PainShield - 70%~~2021 and ~~UroShield - 30%. For the six months ended June 30,~~ 2020, ~~and 2019, the percentage of revenues attributable to our disposable products was 4% and 3%, respectively. For the six months ended June 30, 2020 and 2019,~~ the portion of our revenues that was derived from distributors was ~~91%~~96% and ~~50%~~91%, respectively.

Gross Profit. For the six months ended June ~~31,~~30, 2021 and 2020, ~~and 2019,~~ gross profit was approximately $285,000 and $89,000, ~~and $260,000,~~ respectively, ~~a decrease~~an increase of approximately ~~66%~~220% or ~~$171,000, mainly due~~$196,000, mainly due to ~~an agreement with a distributor where~~sales of our products to distributors at higher margins in 2021 as compared to the same period last year due to increased prices charged to our distributors and also because the Company ~~sold roughly $112,000 of~~did not offer special discounts in 2021 on products as was done in the ~~second quarter of 2020 at a steep discount in order to gain entry into a new market. The Company has since discontinued selling further products to this distributor.~~same fiscal period during 2020.

Gross profit as a percentage of revenues was approximately ~~23%~~68% and ~~76%~~23% for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~decrease~~increase in gross profit as a percentage is mainly due to the ~~reason~~reasons described above.

Research and Development Expenses. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, research and development expenses were approximately ~~$63,000~~$128,000 and ~~$302,000,~~$63,000, respectively between the periods. The ~~decrease~~increase was mainly due to ~~there being no clinical trials~~options expense during the six months ended June 30, ~~2020~~2021, as well as increased payroll costs in 2021 compared to the ~~furloughing of our~~same period in 2020, as we furloughed staff ~~members~~ in the second quarter of 2020 due to the impacts of the COVID-19 pandemic.

Research and development expenses as a percentage of total revenues were approximately ~~16%~~30% and ~~88%~~16% for the six months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

Selling and Marketing Expenses. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, selling and marketing expenses were approximately $607,000 and $434,000, ~~and $592,000,~~ respectively, ~~a decrease~~an increase of approximately ~~27%~~40%, or ~~$158,000,~~$173,000, between the periods. The ~~decrease~~increase was primarily due to ~~a significant reduction in sales~~increased salaries and ~~marketing activities including related traveling or conventions attended during the first quarter of 2020 as well as a temporary reduction of salaries placed~~consulting fees during the second quarter of 2021, as we furloughed staff, or reduced salaries in the second quarter of 2020 ~~both~~ due to the impacts of the COVID-19 pandemic.

Selling and marketing expenses as a percentage of total revenues were approximately ~~113%~~144% and ~~173%~~113% for the six months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

General and Administrative Expenses. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, general and administrative expenses were approximately ~~$1,967,000~~$1,855,000 and ~~$2,485,000,~~$1,967,000, respectively, a decrease of approximately ~~21%~~6%, or ~~$518,000,~~$112,000, between the periods. The decrease was primarily due to the ~~general~~settlement with a contractor in 2020 for $918,750, partially offset by increased costs in 2021 due to a $366,000 settlement of a lawsuit with a former officer and ~~administrative portion of stock-based compensation expense of approximately $1,424,000 in 2019 compared to $120,000 in 2020,~~director, as well as ~~a decrease~~fees incurred related to our efforts to ratify our prior over issuances of common stock, as well as incurring larger salary expenses in ~~professional fees and a temporary reduction of~~2021 as we furloughed staff, or reduced salaries ~~placed during~~in the second quarter of 2020 due to the impacts of the COVID-19 ~~pandemic which was partially offset by the settlement with Bespoke for $918,750.~~pandemic.

General and administrative expenses as a percentage of total revenues were approximately ~~514%~~441% and ~~727%~~514% for the six months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

Financial expenses, net. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, financial expenses, net was approximately ~~$10,000~~$6,000 compared to a ~~$51,000,~~$10,000, respectively, a decrease of approximately ~~$41,000,~~$4,000 between the ~~periods. The~~periods due to the change ~~was derived primarily from exchange rate adjustments and interest expense on notes.~~in fair value of the investment in Sanuwave.

Change in fair value of derivative liabilities. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, there was a change in fair value of derivative liabilities resulting in ~~a gain~~losses of approximately $1,242,000 and $0, ~~and $102,000, respectively, an increase of approximately $102,000, between the periods.~~respectively. The ~~income~~loss in ~~2019~~2021 was derived from the ~~valuation~~Company’s total potentially dilutive shares exceed the Company’s authorized share limit.

~~Loss on extinguishment of derivative liability~~warrants. . For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, there was a ~~loss on extinguishment~~gain of approximately $64,000 and $0, respectively. The gain was related to the settlement of derivative ~~liability~~liabilities which was the result of ~~approximately $0 compared to a $288,000, respectively. The loss in 2019 was derived~~the repurchase of warrants from ~~the extinguishment of embedded derivative liabilities upon repayment of its related debt.~~certain investors.

Warrant modification expense. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, warrant modification expense was approximately $0$1,627,000 and ~~$412,000,~~$0, respectively. The warrant modification expense in ~~2019~~2021 was related to ~~an amendment~~warrants held by a certain investor that were repriced. The investor was also granted new warrants to replace the repriced warrants ~~that extended the expiration date by two years.~~after they were exercised.

Tax expenses. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, tax expenses were ~~$13,000~~$17,000 and ~~$18,000.~~$13,000. The tax expense is computed by multiplying income before taxes at our Israeli subsidiary by the appropriate tax rate.

Net loss. Our net loss ~~decreased~~increased by approximately ~~$1,388,000,~~$2,735,000, or ~~37%~~114%, to approximately ~~$2,398,000~~$5,133,000 for the six months ended June 30, ~~2020~~2021 from approximately ~~$3,786,000~~$2,398,000 in the same period of ~~2019.~~2020. The ~~decrease~~increase in net loss resulted primarily from the factors described above.

We have incurred losses in the amount of approximately ~~$2,398,000 during the six-month period ended June 30, 2020~~$5,133,000 and ~~accumulated~~had negative cash flow from operating activities of ~~$1,378,000 for~~$2,870,000 during the ~~six-month period~~quarter ended June 30, ~~2020.~~

We2021. Although we expect to continue to incur losses and negative cash flows from operating activities, we had a cash balance of just over $5,672,000 as of June 30, 2021 and ~~as a result. Without additional funding,~~therefore, we ~~will not~~ have sufficient resources to fund ~~its operations~~our operation for the next twelve months from the date of this filing. ~~These conditions raise substantial doubt about our ability~~The Company may need to continue ~~as a going concern.~~

During the six-month period ended June 30, 2020, we raised $200,000 through the issuance of notes payable to a related party and received $42,000 from the Paycheck Protection Program. During the next twelve months management expects that we will need to raise additional capital to finance its losses and negative cash flows from operations beyond the next twelve months and may continue to be dependent on additional capital raising as long as ~~its~~our products do not reach commercial profitability. If we do not increase the number of authorized shares of our common stock, we will be unable to issue common stock or convertible instruments. As a result, the Company will be limited in its ability to raise additional capital.

During the six-month period ended June 30, 2021, we received approximately $1,406,000 of net proceeds from the exercise of warrants. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products, our development of future products and competing technological and market ~~developments.~~developments as well as our ability to overcome obstacles that may be presented due to developments caused by the coronavirus outbreak. We ~~have been relying on past~~expect to continue to incur losses and negative cash flows from operations. We intend to use the proceeds generated from equity financings, or strategic alliances with third parties, either alone or in combination with equity financing ~~activities~~ to meet our short-term liquidity requirements ~~but may need to sell additional securities~~as well as to advance our long-term plans. ~~We have historically met our cash needs through a combination of issuance of equity, borrowing activities and sales.~~

~~In connection with the lawsuit filed by our former officer and director in the Haifa Israel District Financial Court,~~While we ~~were required by the court to keep $350,000 of cash restricted. See Part II, Item 1. Legal Proceedings and the risk factor “~~~~We do not~~believe we have sufficient ~~restricted cash in~~capital to execute our ~~bank account as required by a court order related to a lawsuit filed by a former officer and director in Israel. As a result,~~business plan over the next twelve months, there are no assurances that we ~~are in breach of the court order and may be found to be subject to court enforcement actions or penalties or be held in contempt of the court~~.” Subsequent to the imposition of this requirement, we failed to maintain a sufficient amount of cash to comply with the court order. As of June 30, 2020, there was no event of default or violation of a covenant in outstanding notes resulting from the breach of the court order.

~~It is our current belief that if we do~~will not ~~continue to see significant increases in revenues, or if we are unable~~need to raise additional capital at a later time, ~~in the next twelve months,~~or that we ~~may need to reduce our operating budget as well as sales and marketing expenses which may impair our ability to execute our business objectives. However, we may~~would be ~~unable~~able to raise ~~sufficient~~ additional capital, ~~when we require it or upon~~if required, on terms favorable to us. Delisting from NASDAQ Capital Markets would adversely affect our ability to raise additional financing through the public or private sale of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our Common Stock. In addition, the terms of any securities we issue in future financings may be more favorable to new investors and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect on the holders of any of our securities then outstanding. If we are unable to obtain adequate funds on reasonable terms, we may need to curtail operations significantly, or enter into financing agreements with unattractive terms in order to provide sufficient working capital for our operations.

Furthermore, the COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could 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 stock.

We do not have any material commitments to capital expenditures as of June 30, ~~2020,~~2021, and we are not aware of any material trends in capital resources that would impact our business.

~~General~~. As of June 30, ~~2020,~~2021, we had ~~restricted~~ cash and cash equivalents of approximately ~~$202,000,~~$5,672,000, compared to approximately ~~$2,371,000~~$202,000 as of June 30, ~~2019. The decrease is due to limited financing activities in the first and second quarters of~~ 2020. 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 ~~$1,378,000~~$2,870,000 for the six months ended June 30, ~~2020~~2021 and ~~$1,729,000~~$1,378,000 for the same period in ~~2019.~~2020.

Cash provided by financing activities was approximately $1,018,000 for the six months ended June 30, 2021 compared to $242,000 for the six months ended June 30, ~~2020 compared to $3,204,000 for the six months ended June 30, 2019.~~2020.

~~Except as disclosed, as~~As of June 30, ~~2020,~~2021, 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.

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 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, presently, we are no longer experiencing such delays in the production of our products. ~~Additionally, the~~ ~~COVID-19 pandemic has also caused significant disruptions to the global financial markets, which may impact our ability to raise additional capital.~~ That said, there are no assurances that if a second 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,~~(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.

~~Management of the Company,~~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 June 30 ~~2020,~~, 2021, the end of the period covered by this ~~quarterly report~~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 ~~Securities~~ Exchange Act, ~~of 1934, as amended (“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 ~~the company’s~~our management, including ~~its~~our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on their evaluation, as of the end of the period covered by this Form 10-Q, ~~the Company’s~~our Chief Executive Officer and Chief Financial Officer have concluded that ~~the Company’s~~our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange Act ~~of 1934, as amended)~~ were not effective because of the material 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, ~~2019,~~2020, filed with the ~~Securities and Exchange Commission~~SEC on ~~May 20, 2020.~~April 15, 2021.

In addition ~~due~~ to the ~~recent cybersecurity incident reported~~previously existing material weaknesses described in ~~June~~our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, we ~~will review~~identified another material weakness in our ~~established controls~~internal control over financial reporting in that we did not properly account for the number of shares of our common stock issued in connection with the conversion of shares of our preferred stock and ~~procedures that involve cybersecurity matters to determine~~ the ~~potential material impact to the Company’s financial results, operations, and/or reputation to insure such incidents are immediately reported by management to the Board~~exercise of ~~Directors, or individual members or committees thereof, as appropriate,~~warrants, which resulted in ~~accordance with our escalation framework and insure~~ the Company ~~has established procedures to ensure that management responsible for overseeing the effectiveness~~issuing more shares of ~~disclosure controls is informed in a timely manner of known cybersecurity risks and incidents that may materially impact~~common stock than are authorized under our ~~operations and that timely public disclosure is made as appropriate.~~governance documents (the “Overissuance Material Weakness”).

During ~~2019,~~2020, management developed a remediation plan, whereby we implemented changes to our internal controls for these material ~~weaknesses.~~weaknesses relating to (i) our controls over information technology and information systems relevant to the preparation of our financial statements, (ii) our controls over management review procedures for processing, recording and reviewing transactions related to certain contracts, accounting memos and certain monthly closing procedures, and (iii) our lack of a formalized written set of policies and procedures including testing documentation for our system of internal control over financial reporting (the “Existing Material Weaknesses”). Our remediation activities with respect to the Existing Material Weaknesses included: (a) expanded consultations with third party specialists on complex accounting matters, financial reporting and regulatory filings, (b) enhanced documentation to support a more precise review process, and (c) enhanced monitoring of the review process. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. Although the Company has taken numerous steps with respect to the Existing Material Weaknesses, our remediation plan is not complete due to the lack of a written testing plan to conclude if our controls and procedures and management were operating effectively; and our remediation plan has not operated for a sufficient period of time for the Company to complete testing to conclude that our newly implemented controls and procedures were operating effectively as of June 30, ~~2020.~~2021. In addition, we expect to have a plan in place by the end of the third quarter of 2021 with respect to the remediation of our Overissuance Material Weakness.

Other than described above in this Item 4, there has been no change in our internal control over financial reporting that occurred during the ~~second quarter of 2020~~three months ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we may be involved in certain claims and litigation arising out of the ordinary course and conduct of business. Management 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 most likely outcome.

~~We are subject~~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. As of the date of this report, the parties have respectively submitted the initial Request for Arbitration and Response to Request for Arbitration with Counterclaims, and agreed on a procedural timeline pursuant to which final resolution of the arbitration is expected by February 2022 (if not dismissed or settled earlier). The Company disputes the claims asserted by Protrade and intends to respond to the Request and defend against the claims vigorously.

On December 17, 2019, a lawsuit was filed by ~~our~~a former officer and director, Jona Zumeris, ~~on December 17, 2019~~ in the Haifa Israel District Financial Court, seeking damages of approximately $900,000 for breach of the Separation Agreement executed on July 4, 2018, and to which matter both parties have agreed to proceed to settle in mediation scheduled to begin in late May 2020. We believe that a major part of the allegations included in the suit are without merit, however, due to the uncertainties of litigation or mediation, we can give no assurance that we will be able to reach reasonable settlement, or if it were to proceed in court, prevail on the claims made against us in such lawsuit.2018. The Israeli court issued a court order demanding that we restrict approximately $700,000 of the Company’s money until the matter is adjudicated. The Company appealed the court ~~order. In~~order and in February 2020, the Company agreed to restrict approximately ~~$350,000~~1,187,000 NIS (“New Israeli Shekel”) and agreed to try to settle the matter in mediation which commenced in May 2020. The court required such amount restricted and separated in the Company’s bank savings account; however, the Company’s bank accounts do not have any restrictions in place which prohibit the Company from using its available funds at its discretion. The Company did not have sufficient amount of cash to comply with the court order and only had restricted cash of $202,000 in its bank account as of June 30, 2020. Following Junemediation. On November 30, 2020, the Company ~~has used its available funds, including most of~~funded the ~~restricted cash,~~escrow account with $391,000. In January 2021, the parties reached a settlement in ~~order to fund its operations. A settlement was not reached in May and although the mediation process has not yet concluded,~~which the Company ~~believes that it and will now likely go to trial, although no date has been set.~~paid the plaintiff approximately $366,000 as settlement in full.

There are no other material proceedings in which any of our directors, officers or affiliates or any registered or beneficial ~~shareholder~~stockholder 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.

The following description of risk factors includes any material changes to, and supersedes the description of, the risk factors addressed below associated with our business, financial condition and results of operations previously disclosed in “Item 1A. Risk Factors” of our ~~2019~~Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC on April 15, 2021 and “Item 1A. Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as filed with the SEC on May ~~20, 2020.~~24, 2021. 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 factors contains forward-looking statements. These risk factors 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 in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

We do not have sufficient restricted cash in our bank account as required by a court order related to a lawsuit filed by a former officer and director in Israel. As a result, we are in breach of the court order and may be found to be subject to court enforcement actions or penalties or be held in contempt of the court.

In connection with the lawsuit filed by our former officer and director in the Haifa Israel District Financial Court, seeking damages of approximately $900,000 for breach of a separation agreement, we had agreed to restrict approximately $350,000 of cash and to try to settle the matter in mediation, which commenced in May 2020. We were required by the court to keep such amount of cash restricted. Subsequent to the imposition of this requirement, we failed to maintain a sufficient amount of cash to comply with the court order. As a result of our breach of the court order, we may be found to be subject to court enforcement actions or penalties or be held in contempt of the court, which could have a material adverse effect on our business, financial condition and results of operations.

In December 2019, a strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China, and has reached multiple other countries, resulting in government-imposed quarantines, travel restrictions and other public health safety measures in China and other affected countries. The ongoing COVID-19 pandemic has and may continue to adversely impact our business, as our operations are based in and rely on third parties located in countries affected by the outbreak. Our third-party manufacturer, which is based in China, temporarily shut down for sixty days due to the outbreak and became fully operational in April 2020 which led to a significant delay in the production of goods needed to fulfil our sales orders which were scheduled to be fulfilled in our first quarter of 2020. We were able to fulfil 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 has been 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 was subsequently approved in April 2020. The various precautionary measures taken by many governmental authorities around the world in order to limit the spread of 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. The financial downturn has compelled us to furlough or reduce working hours for much of our operating staff, and has forced remaining staff as well as third-party contractors, and our clients may encounter cash-flow issues that will delay their payments to us. In addition, remaining staff members have been forced to operate remotely from their homes, which is continuing to result in delays in obtaining certain financial records. 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 have been affected by government-imposed precautionary measures, thereby delaying our receipt of these services. Such government-imposed precautionary measures may have been relaxed in certain countries or states, but there is no assurance that more strict measures will be put in place again due to a resurgence in COVID-19 cases. Therefore, the COVID-19 pandemic has and may again disrupt production and cause delays in the supply and delivery of our products, may continue to affect our operation, may further divert the attention and efforts of the medical community to coping with COVID-19 and disrupt the marketplace in which we operate and may have a material adverse effect on our operations. Assessment of the complete extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. The continuation of the COVID-19 pandemic could materially disrupt our business and operations, hamper our ability to raise additional funds or sell or securities, continue to slow down the overall economy, curtail consumer spending, interrupt our sources of supply, and make it hard to adequately staff our operations.

~~If we fail to maintain effective internal control over financial reporting, our business, financial condition or results of operations may be adversely affected.~~

As a public reporting company, we are required to establish and maintain effective internal control over financial reporting. Failure to establish such internal control, or any failure of such internal control once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. Any failure of our internal control over financial reporting could also prevent us from maintaining accurate accounting records and discovering accounting errors and financial frauds.

Rules adopted by the Securities and Exchange Commission pursuant to Section 404 require annual assessment of our internal control over financial reporting. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. If we cannot assess our internal control over financial reporting as effective, investor confidence and share value may be negatively impacted. In addition, management’s assessment of internal control over financial reporting may identify weaknesses and conditions that need to be addressed in our internal control over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting (including those weaknesses identified in our periodic reports), or disclosure of management’s assessment of our internal control over financial reporting may have an adverse impact on the price of our securities.

As disclosed in Part II, Item 4, “Controls and Procedures,” we have identified a material weakness in our internal control over financial reporting due to a lack of a full and complete testing of our disclosure controls and procedures. We concluded that our internal control over financial reporting and related disclosure controls and procedures were not effective as of June 30, 2020. Our management has implemented remediation measures and expects that such measures will be sufficient to fully remediate the material weakness in our internal control over financial reporting that existed at June 30, 2020; however, we cannot guarantee that these steps will be sufficient to remediate the deficiencies or that we will not have a material weakness in the future. If our remedial measures are insufficient to address the material weakness or if additional material weaknesses arise in the future, our interim or annual financial statements may contain material misstatements or omissions and we could be required to restate our financial results.

~~Our business and operations would suffer in the event of computer system failures, cyber-attacks or deficiencies in our cyber-security or those of third-party providers.~~

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, research data, our proprietary business information and that of our suppliers, technical information about our products, clinical trial plans and employee records. Similarly, our third-party providers possess certain of our sensitive data and confidential information. The secure maintenance of this information is critical to our operations and business strategy. Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, ransomware, cyber fraud, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, encrypted, lost or stolen. Any such access, inappropriate disclosure of confidential or proprietary information or other loss of information, including our data being breached at third-party providers, could result in legal claims or proceedings, liability or financial loss under laws that protect the privacy of personal information, disruption of our operations or our product development programs and damage to our reputation, which could adversely affect our business.

Furthermore, we and our third-party providers rely on electronic communications and information system to conduct our operations. We and our third-party providers have been, and may continue to be, targeted by parties using fraudulent e-mails and other communications in attempts to misappropriate bank accounting information, passwords, or other personal information or to introduce viruses or other malware to our information systems. In June 2020, we experienced a cybersecurity incident. Specifically, we believe that one or two unauthorized third parties were able to use an email domain similar to ours to convince two of our customers to send payments in the aggregate amount of approximately $308,000 to unauthorized bank accounts that should have been sent to us. As of the date of this filing, all funds have been recovered by the Company. Our management has launched an investigation into the incident and has notified the appropriate government authorities. We are exploring a range of steps to enhance our security protections and prevent future unauthorized activity. Though we endeavor to mitigate these threats, such cyber-attacks against us or our third-party providers and business partners remain a serious issue. The pervasiveness of cybersecurity incidents in general and the risks of cyber-crime are complex and continue to evolve. Although we are making significant efforts to maintain the security and integrity of our information systems and are exploring various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.

If we fail to comply with the continued listing requirements of the NASDAQ Capital Market, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively ~~impacted.~~impacted.

Our common stock is currently listed for trading on the NASDAQ Capital Market. We must satisfy NASDAQ’s continued listing requirements, including, among other things, a minimum closing bid price of $1.00 per share and a minimum stockholders’ equity of $2.5 million or risk delisting, which would have a material adverse effect on our business. A delisting of our common stock from the NASDAQ Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.

On ~~September 14, 2018,~~April 21, 2021, we received a ~~letter~~notice from the Listing Qualifications ~~Staff~~Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it was no longer in compliance with the minimum stockholders’ equity requirement for continued listing on the ~~NASDAQ~~Nasdaq Capital ~~Market. Nasdaq Listing Rule 5550(b)(1) requires listed companies to maintain~~Market (the “Equity Requirement”). The Company reported stockholders’ equity of ~~at least $2.5~~approximately $2.4 million ~~(the “Equity Requirement”).~~

~~Following~~in its Annual Report on Form 10-K as of and for the fiscal year ended December 31, 2020 and did not otherwise satisfy the alternative criteria pertaining to market value of listed securities or net income. In accordance with the Nasdaq Listing Rules, the Company was granted a ~~hearing on May 2, 2019, a Nasdaq Hearings Panel was appointed~~period of 45 calendar days, or through June 7, 2021, to ~~review our~~submit its plan to evidence compliance with the Equity Requirement for the Staff’s review On May 24, 2021, the Company filed its Quarterly Report on Form 10-Q for the first quarter of 2021 and ~~on August 5, 2020, the Staff issued a letter to us in which it indicated that, since we had failed to report~~reported stockholders’ equity of ~~at least $2.5 million in each of its last three periodic reports filed with~~approximately $4.3 million. On June 1, 2021, the ~~Securities and Exchange Commission, our common shares would be subject to delisting on August 14, 2020, unless we request an appeal of this determination~~Company was notified by ~~4:00 p.m. Eastern Time on August 12, 2020 (the “Hearing Request”).~~

~~On August 12, 2020, we timely requested a Hearing Request, which automatically stayed any suspension or delisting action pending a decision of a~~ Nasdaq ~~Hearings Panel. At~~that the hearing, we will provide the Nasdaq Hearings Panel with an update on its compliance plan and, if necessary, request a further extension of time in which to regain compliance. Pursuant to the Nasdaq Listing Rules, the Nasdaq Hearings Panel has the discretion to grant an additional extension of time of up to 180 calendar days, as measured from August 5, 2020.

~~However, there can be no assurance that our plan will be accepted by the Nasdaq Hearings Panel or that, if it is, we will be able to regain~~Company regained compliance with ~~the applicable Nasdaq~~Nasdaq’s listing ~~requirements. If our common stock is delisted, it could be more difficult to buy or sell our common stock or to obtain accurate quotations,~~qualifications and ~~the price of our common stock could suffer a material decline. Delisting could also impair our ability to raise capital.~~that this matter was now closed.

There is no assurance we can maintain compliance with such minimum listing requirements. If our common stock were delisted from ~~NASDAQ,~~Nasdaq, trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or the Pink Market maintained by OTC Markets Group Inc. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock on an over-the-counter market, and many investors would likely not buy or sell our common stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons. In addition, as a delisted security, our common stock would be subject to SEC rules as a “penny stock,” which impose additional disclosure requirements on broker-dealers. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our common stock. For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our common stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.

We essentially have no common shares available for issuance to raise capital to fund our general corporate overhead, our outside R&D costs associated with our R&D activities or other capital needs unless the number of authorized shares of common stock is increased.

Currently, we have issued all but one of the shares of common stock that are authorized under our Amended and Restated Certificate of Incorporation, as amended. Accordingly, we have essentially no shares of common stock available for issuance, which will limit our ability to raise funds in the future to the extent necessary. As of August 16, 2021, 8,356,428 shares of common stock were issuable upon conversion of outstanding shares of preferred stock or exercise of outstanding warrants and equity awards. We do not have a sufficient number of authorized shares of common stock for such issuances and are required to record a derivative liability as a result. At our special meeting held earlier in 2021, we solicited the approval of our stockholders to amend our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of our common stock; however, we did not receive the requisite stockholder approval. We have included a proposal to increase the number of authorized shares of common stock for consideration by our stockholders at our annual meeting scheduled for August 17, 2021. If the number of authorized shares of common stock is not increased, we will have no shares available for issuance upon the conversion or exercise of our outstanding securities or for the issuance of additional shares to raise capital to fund our general corporate overhead, outside R&D costs and other capital needs. Further delays in securing, or failing to secure, stockholder approval to amend our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of our common stock may prevent us from satisfying our existing obligations and/or executing a capital raising transaction, which may have a material adverse effect on our business and financial condition.

If we fail to maintain effective internal control over financial reporting, our business, financial condition or results of operations may be adversely affected.

As disclosed in Part II, Item 9A, “Controls and Procedures,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, we have identified material weaknesses in our internal control over financial reporting due to a lack of a full and complete testing of our disclosure controls and procedures and separately related to the recent overissuance of shares of our common stock. We concluded that our internal control over financial reporting and related disclosure controls and procedures were not effective as of December 31, 2020. Our management has implemented remediation measures with respect to the controls and written policies and procedures as described in Part II, Item 9A, “Controls and Procedures” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and management expects that such measures will be sufficient to fully remediate such material weaknesses in our internal control over financial reporting. However, we have not implemented remediation measures with respect to the overissuance of shares of our common stock but expect to have a plan of remediation in place during the third quarter of 2021. We obtained a ratification from our stockholders with respect to the overissuance of shares of our common stock and we have filed a Certificate of Validation with the Secretary of State of the State of Delaware, which has become effective. However, we must address the policies and procedures that allowed such overissuance to occur and implement a remediation plan. We cannot guarantee that these steps will be sufficient to remediate the deficiencies or that we will not have a material weakness in the future. If our remedial measures are insufficient to address the material weakness or if additional material weaknesses arise in the future, our interim or annual financial statements may contain material misstatements or omissions and we could be required to restate our financial results.

~~None~~All sales of unregistered securities during the three months ended June 30, 2021 were previously disclosed in a Current Report on Form 8-K

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.

525 Executive ~~Blvd.~~ Blvd. Elmsford, New York		10523
(Address of principal executive office)		(Zip Code)

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

Large accelerated filer	~~[ ]~~☐	Accelerated filer	~~[ ]~~☐

Non-accelerated filer	~~[ ]~~☒	Smaller reporting company	~~[X]~~☒

		Emerging growth company	~~[X]~~☐

Comprehensive loss:
Net loss available to common stockholders	(216	)	(1,477	)	(5,133	)	(2,398	)
Change in foreign currency translation adjustments	(14	)	-		(8	)	-
Comprehensive loss available to common stockholders	(230	)	(1,477	)	(5,141	)	(2,398	)

	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
	Series C Preferred Stock				Series D Preferred Stock				Series E Preferred Stock				Common Stock				Additional Paid - in		Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity
Balance, March 31, 2020		2,993,142	$	2		304	$	-		1,715,000		2		4,313,764	$	5	$	39,740		-	$	(39,251	)	$	498
Stock-based compensation		-		-		-		-		-		-		-		-		72		-		-			72
Exchange of Series E Preferred Stock into Common Stock
Exchange of Series E Preferred Stock into Common Stock, shares
Reclass from liability to equity
Other comprehensive loss
Exercise of warrants
Exercise of warrants, shares
Warrants issued with notes payable		-		-		-		-		-		-		-		-		123		-		-			123
Net loss		-		-		-		-		-		-		-		-		-				(1,477	)		(1,477	)
Balance, June 30, 2020		2,993,142	$	2		304	$	-		1,715,000	$	2		4,313,764	$	5	$	39,935		-	$	(40,728	)	$	(784	)

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	2

	Condensed Consolidated Statements of Stockholders’ Equity for the ~~Three Months and~~ Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	3

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	45

	Notes to Condensed Consolidated Financial Statements	56

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1213

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2020

Item 4.	Controls and Procedures	20

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosures	25

Item 5.	Other Information	25

Item 6.	Exhibits	25

Signatures		2226

													2021			2020			2021			2020
	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2021			2020			2021			2020

Revenues	$	269		$	263		$	383		$	342		$	318		$	269		$	421		$	383
Cost of revenues		231			56			294			82			110			231			136			294
Gross profit		38			207			89			260			208			38			285			89

Operating expenses:
Research and development		16			150			63			302			64			16			128			63
Selling and marketing		180			271			434			592			296			180			607			434
General and administrative		1,310			682			1,967			2,485			839			1,310			1,855			1,967

Total operating expenses		1,506			1,103			2,464			3,379			1,199			1,506			2,590			2,464

Loss from operations		(1,468	)		(896	)		(2,375	)		(3,119	)		(991	)		(1,468	)		(2,305	)		(2,375	)

Financial income (expense), net		(5	)		(24	)		(10	)		(51	)		1			(5	)		(6	)		(10	)
Change in fair value of derivative liabilities		-			107			-			102			706			-			(1,242	)		-
Loss on extinguishment of derivative liability		-			(288	)		-			(288	)
Gain on purchase of warrants														64			-			64			-
Warrant modification expense		-			-			-			(412	)		-			-			(1,627	)		-

Loss before taxes on income		(1,473	)		(1,101	)		(2,385	)		(3,768	)		(220	)		(1,473	)		(5,116	)		(2,385	)

Income tax benefit / (expense)		(4	)		(6	)		(13	)		(18	)		4			(4	)		(17	)		(13	)

Net loss	$	(1,477	)	$	(1,107	)	$	(2,398	)	$	(3,786	)	$	(216	)	$	(1,477	)	$	(5,133	)	$	(2,398	)

Basic and diluted net loss available for holders of common stock, Series C Preferred Stock and Series D Preferred Stock	$	(0.20	)	$	(0.16	)	$	(0.33	)	$	(0.55	)	$	(0.01	)	$	(0.20	)	$	(0.21	)	$	(0.33	)

Weighted average common shares outstanding:
Basic and diluted		7,252,510			6,788,716			7,279,708			6,841,252			24,776,302			7,252,510			24,476,551			7,279,708

	Series C Preferred Stock				Series D Preferred Stock				Series E Preferred Stock				Common Stock				Additional Paid - in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance, March 31, 2019		2,733,142	$	2		304	$	-		-		-		4,076,552	$	4	$	34,740	$	(35,215	)	$	(469	)
Stock-based compensation		-		-		-		-		-		-		-		-		111		-			111
Exercise of options		-		-		-		-		-		-		63,412		-		4		-			4
Issuance of preferred series E stock		-		-		-		-		1,600,000		2		-		-		3,198		-			3,200
Reclassification of warrants		-		-		-		-		-		-		-		-		196		-			196
Net loss		-		-		-		-		-		-		-		-		-		(1,107	)		(1,107	)
Balance, June 30, 2019		2,733,142	$	2		304	$	-		1,600,000	$	2		4,139,964	$	4	$	38,249	$	(36,322	)	$	1,935

	Series C Preferred Stock				Series D Preferred Stock				Series E Preferred Stock				Common Stock				Additional Paid - in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income			Deficit			Equity
Balance, March 31, 2021		666,667	$	1		153	$	-		875,000	$	1		24,109,634	$	24	$	51,832	$	61		$	(47,572	)	$	4,347
Stock-based compensation		-		-		-		-		-		-		-		-		35		-			-			35
Other comprehensive loss		-		-		-		-		-		-		-		-		-		(2	)		-			(2	)
Net loss		-		-		-		-		-		-		-		-		-		-			(216	)		(216	)
Balance, June 30, 2021		666,667	$	1		153	$	-		875,000	$	1		24,109,634	$	24	$	51,867	$	59		$	(47,788	)	$	4,164

Price at valuation	$	1.86
Exercise price	$	1.86
Risk free interest		0.34	%
Expected term (in years)		5
Volatility		60.2	%


Price at valuation	$	1.04
Exercise price	$	1.04
Risk free interest		0.49	%
Expected term (in years)		5
Volatility		81.5	%

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020

Research and development		1		-		1		-		5		1		10		1
Selling and marketing		11		11		22		22		10		11		31		22
General and administrative		60		100		120		1,424		84		60		167		120

Total	$	72	$	111	$	143	$	1,446	$	99	$	72	$	208	$	143

Risk free interest	0.05 – 0.85	%
Dividend yield	0	%
Volatility	82.7% - 211	%
Contractual term (in years)	0.67 – 6.56

Price at valuation	$	2.21
Exercise price	$	2.50
Risk free interest		0.34	%
Expected term (in years)		7
Volatility		60.7	%

Stock price	$	0.85
Conversion price	$	0.72 - 6.90
Contractual term (in years)		0.67 – 6.56
Volatility (annual)		82.7% - 211	%
Risk-free rate		0.09% - 1.21	%

●	Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets;
●	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 reporting entity to develop its own assumptions.

	Derivative Liabilities
Balance – December 31, 2020	$	2,471
New issuances		1,755
Change in fair value of derivative liability		1,242
Exercises/redemptions		(3,620	)
Balance – June 30, 2021	$	1,848


2021	$	5
2022		10
2023		10
Total undiscounted operating lease payments		25
Less: Imputed interest		3
Present value of operating lease liabilities	$	22

	June 30, 2020		June 30, 2019
Series D Preferred Stock		303,782		303,782
Series E Preferred Stock		1,715,000		1,600,000
Stock Options - employee and non-employee		1,571,332		749,361
Warrants		266,667		266,667
Total		3,856,781		2,919,810

Price at valuation	$	0.19 – 0.26
Exercise price	$	0.19
Risk free interest		0.66 - 0.73	%
Expected term (in years)		10
Volatility		140.6 – 142.3	%


Price at valuation	$	0.18
Exercise price	$	0.19
Risk free interest		1.45	%
Expected term (in years)		9
Volatility		133.3	%

●	●	Our ~~ability to continue as a going concern.~~history of losses and expectation of continued losses.

●	~~The delisting of our common stock from the NASDAQ Capital Market.~~

●	The geographic, social and economic impact of COVID-19 on the Company’s business operations.

●	~~The~~Our ability to raise funding for, and the timing of, clinical studies and eventual U.S. Food and Drug Administration approval of our ~~other~~ product candidates.
	●	The risk that we may not obtain the requisite votes at our annual meeting to increase the number of authorized shares of common stock.
●	●	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 ~~regain compliance~~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 and the risk that our common stock will be delisted if we cannot do so.~~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 ~~portfolio.~~portfolio and our ability to protect our intellectual property rights.

●	Our ability to recruit and retain qualified regulatory and research and development personnel.

●	~~The impact of cybersecurity risks and incidents and the related actual or potential costs and consequences of such risks and incidents, including costs to limit such risks.~~

●	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.
	●	Risks related to our operations in Israel.
●	●	Future sales of large blocks of our common stock, which may adversely impact our stock price.

●	~~Our ability to comply with our contractual covenants, including in respect to our debt.~~

●	Depth of the trading market in our common stock.

●	being permitted to present only two years of audited financial statements and only two years of related disclosure in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q;

●	being permitted to provide less extensive narrative disclosure than other public companies including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements;

●	being permitted to utilize exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved;

●	~~being permitted to defer complying with certain changes in accounting standards; and~~

●	~~being permitted to use test-the-waters communications with qualified institutional buyers and institutional accredited investors.~~

Exhibit No.		Description
3.1*		~~Description~~ Certificate of Validation of NanoVibronix, Inc.
31.1*
~~10.1~~		~~Form of Note (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on June 26, 2020).~~
~~10.2~~		~~Form of Warrant (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on June 26, 2020).~~
10.3**		~~Note between the Company and Cross River Bank (SBA – Payroll Protection Program loan), dated May 14, 2020.~~
~~4.1~~		~~Form of Certificate of Designation of Series E Convertible Preferred Stock (incorporated by reference to Exhibit 4.1 to the Form 10-Q filed on November 19, 2019).~~
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*		The following materials from the Company’s Quarterly Report on Form 10-Q for the ~~quarter~~three months ended June 30, ~~2020,~~2021, formatted in Inline XBRL (eXtensible Business Reporting Language), (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii) Consolidated Statements of Changes in Equity (Deficiency) (iv) Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements

*	~~Filed herewith.~~
**104	~~Previously filed as with the~~	The cover page from this Quarterly Report on Form 10-Q ~~filed on August 19, 2020.~~for the quarter ended June 30, 2021, formatted in Inline XBRL and contained in Exhibit 101.


Date: August ~~24, 2020~~16, 2021	By:	/s/ Brian Murphy
	Name:	Brian Murphy, Ph.D.
	Title:	Chief Executive Officer

Date: August ~~24, 2020~~16, 2021	By:	/s/ ~~James S. Cardwell~~Stephen Brown
	Name:	~~James S. Cardwell~~Stephen Brown
	Title:	Chief Financial Officer