UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-36445
NanoVibronix, Inc.
(Exact name of registrant as specified in its charter)
(Address of principal executive office) (Zip Code)
Registrant’s telephone number, including area
code: (914)233-3004
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, par value $0.001 per share NAOV NASDAQ Capital Market
Securities registered pursuant to Section 12(g) of
the Act: None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No☒
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements
for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ 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.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has
filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is
a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
The aggregate market value of voting stock held by
non-affiliates as of June 30, 2024, the last business day of the registrant’s most recently completed second quarter and based
on the closing price of the registrant’s common stock as reported on the Nasdaq Capital Market, was approximately $1.9 Million.
The number of shares outstanding of the registrant’s
common stock as of March 31, 2025, was 759,297 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
NANOVIBRONIX, INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
PART I. 1
ITEM 1: BUSINESS 1
ITEM 1A: RISK FACTORS 62
ITEM 1B: UNRESOLVED STAFF COMMENTS 108
ITEM 1C: CYBERSECURITY 108
ITEM 2: PROPERTIES 109
ITEM 3: LEGAL PROCEEDINGS 110
ITEM 4: MINE SAFETY DISCLOSURES 110
ITEM 6: [RESERVED] 112
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 122
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 122
ITEM 9A: CONTROLS AND PROCEDURES 122
ITEM 9B: OTHER INFORMATION 124
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 125
ITEM 11: EXECUTIVE COMPENSATION 133
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES 150
PART IV.
ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULES 152
i
EXPLANATORY NOTE
On February 14, 2025, subsequent to the end of the
fiscal year ended December 31, 2024, the fiscal year to which this Annual Report on Form 10-K relates and as further described herein,
pursuant to the terms of that certain Agreement and Plan of Merger, dated as of February 14, 2025 (the “Merger Agreement”),
by and among NanoVibronix, Inc. (the “Company”) NVEH Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary
of NVEH Merger Sub I, Inc. (“First Merger Sub”), NVEH Merger Sub II, LLC, a Delaware limited liability company and a wholly-owned
subsidiary of the Company (“Second Merger Sub”), and Predecessor ENvue, the Company and Predecessor ENvue effected (i) a
merger of First Merger Sub with and into Predecessor ENvue, with the First Merger Sub ceasing to exist and Predecessor ENvue becoming
a wholly-owned subsidiary the Company and (ii) the merger of Predecessor ENvue with and into Second Merger Sub (the “Second Merger”
and, together with the First Merger, the “Merger”), with Second Merger Sub being the surviving entity of the Second Merger
(“Surviving Entity”). At the effective time of the Second Merger, the certificate of formation of the Surviving Entity was
amended and restated to, among other things, to change the name of the Surviving Entity to “ENvue Medical Holdings LLC.”
Except as otherwise expressly provided herein, the
information in this Annual Report on Form 10-K does not reflect the consummation of the Merger which, as discussed above, occurred subsequent
to the period covered hereunder.
Cautionary
Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K 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, are intended to 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 actually be achieved. Forward-looking
statements are based on information we have when those statements are made or our management’s good faith belief as of that time
with respect to future events, and are subject to a number of risks, and uncertainties and assumptions that could cause actual performance
or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks are more fully described
in the “Risk Factors” section of this Annual Report on Form 10-K. Important factors that could cause such differences include,
but are not limited to:
● Our history of losses and expectation of continued losses.
● Market acceptance of existing and new products.
● Risks of product liability acclaims and the availability of insurance.
ii
● Our ability to generate internal growth.
● Risks related to computer system failures and cyber-attacks.
● Our ability to obtain regulatory approval in foreign jurisdictions.
● The price of our securities is volatile with limited trading volume.
● The adoption of health policy changes and health care reform.
● Lack of financial resources to adequately support our operations.
● Changes in our relationship with key collaborators.
● Our failure to comply with regulatory guidelines.
● Uncertainty in industry demand and patient wellness behavior.
● Depth of the trading market in our common stock.
iii
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. Please see “Item 1A. Risk Factors”
for additional risks which could adversely impact our business and financial performance. 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 Annual Report on Form 10-K are based on information available to us on the date hereof.
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.
Unless the context otherwise indicates or requires,
the terms “we,” “our,” “us,” “NanoVibronix,” and the “Company,” as used in
this Annual Report on Form 10-K, refer to NanoVibronix, Inc. and its subsidiaries as a combined entity, except where otherwise stated
or where it is clear that the terms mean only NanoVibronix, Inc. exclusive of its subsidiaries.
Trademarks
We have proprietary rights to certain trademarks
used in this Annual Report on Form 10-K that are important to our business, some of which are registered under applicable intellectual
property laws, including but not limited to UroShieldTM, PainShieldTM MD, PainShieldTM Plus, WoundShieldTM, UroShield®,
PainShield®, PainShield Plus®, WoundShield®, UroShield®, NanoVibronix®, Envizion Medical, ENsump, ENvue, ENgat, Envizion
(wordmark and logo), and ENvue’s logo in key countries, including the U.S., Europe, and China.
Solely for convenience, trademarks and trade names
referred to in this Annual Report appear without the “®” or “TM” symbols, but such references are not
intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights
of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trademarks,
trade names or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark,
trade name or service mark of any other company appearing in this Annual Report on Form 10-K is the property of its respective holder.
iv
PART I
ITEM 1. BUSINESS
Overview
We were organized as a Delaware corporation in October
2003. On February 14, 2025, we consummated and completed the Merger pursuant to the Merger Agreement, as further described below. Following
the consummation of the Merger, NanoVibronix will conduct its operations through its two wholly-owned subsidiaries: (i) NanoVibronix
Ltd., a private company incorporated under the laws of the State of Israel (“Nano OpCo”) and (ii) ENvue Medical Holdings
LLC, a Delaware limited liability company (together with its respective subsidiaries, “Predecesor ENvue”). Nano OpCo focuses
on non-invasive biological response-activating devices that target biofilm prevention, pain therapy, and wound healing and can be administered
at home, without the assistance of medical professionals. ENvue is a medical device company engaged in the research, development, production,
marketing, and sale of medical devices in the field of enteral feeding and are in the initial stage of commercializing our products.
The descriptions of the two business divisions, their corresponding products, and business models are detailed below.
Reverse Stock Splits
On February 8, 2023, we effected a reverse stock
split of our common stock at a ratio of 1-for-20 (the “2023 Reverse Stock Split”, and on February 13, 2025, we effected a
reverse stock split of our common stock at a ratio of 1-for11 (the “2025 Reverse Stock Split” and together with the 2023
Reverse Stock Split, the Reverse Stock Splits”) pursuant a Certificate of Amendment to our Amended and Restated Certificate of
Incorporation. At the effective time of the 2023 Reverse Stock Split and the 2025 Reverse Stock Split, every 20 and 11 shares, respectively,
of our issued and outstanding common stock were converted automatically into one issued and outstanding share of common stock without
any change in the par value per share. Any fractional share of a stockholder resulting from the Reverse Stock Splits was rounded up to
the nearest whole number of shares. Proportional adjustments were made to the number of shares of our common stock issuable upon exercise
or conversion of the Company’s equity awards, warrants and other convertible securities, as well as the applicable exercise or
conversion price thereof. Except as otherwise indicated, all share and per-share figures in this Annual Report on Form 10-K have been
adjusted to reflect the Reverse Stock Splits.
Recent Developments
2025 Reverse Stock Split
On March 13, 2025, at 4:05 p.m., Eastern Time, pursuant
to a Certificate of Amendment to our Amended and Restated Certificate of Incorporation, as amended, 2025 Reverse Stock Split became effective.
Our common stock began trading on Nasdaq on a split-adjusted basis on March 14, 2025. See “Reverse Stock Splits” above.
The Merger Agreement
On February 14, 2025, pursuant to the terms of that
certain Agreement and Plan of Merger, dated as of February 14, 2025 (the “Merger Agreement”), by and among the Company, NVEH
Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of NVEH Merger Sub I, Inc. (“First Merger Sub”), NVEH
Merger Sub II, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“Second Merger Sub”),
and Predecessor ENvue, the Company and Predecessor ENvue effected (i) a merger of First Merger Sub with and into Predecessor ENvue, with
the First Merger Sub ceasing to exist and Predecessor ENvue becoming a wholly-owned subsidiary the Company and (ii) the merger of Predecessor
ENvue with and into Second Merger Sub (the “Second Merger” and, together with the First Merger, the “Merger”),
with Second Merger Sub being the surviving entity of the Second Merger (“Surviving Entity”). At the effective time of the
Second Merger, the certificate of formation of the Surviving Entity was amended and restated to, among other things, to change the name
of the Surviving Entity to “ENvue Medical Holdings LLC.” In connection with the Merger Agreement, we issued (i) 1,734,995
shares of common stock (the “Merger Shares”), which such number of shares represented no more than 19.9% (the “Exchange
Cap”) of the outstanding shares of common stock as of immediately before the First Effective Time and (ii) 57,720 shares of Series
X Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Series X Preferred Stock”) in excess of the Exchange
Cap to the holders of Predecessor ENvue in consideration for 100% of Predecessor ENvue. Each share of Series X Preferred Stock will be
convertible into 1,000 shares of our common stock, subject to and contingent upon the affirmative vote of a majority of the shares of
common stock present or represented and entitled to vote at a meeting of stockholders of Company to approve, for purposes of the Nasdaq
Listing Rules, the issuance of shares of our common stock to the stockholders of Predecessor ENvue upon conversion of any and all shares
of Series X Preferred Stock in accordance with the terms of the Certificate of Designation for the Series X Preferred Stock.
The Merger was consummated and completed on February
14, 2025.
After giving effect to the Merger, pursuant to the
terms and conditions of the Merger Agreement: (i) the holders of the outstanding equity of Predecessor ENvue immediately prior to the
effective time of the First Merger (“First Effective Time”) own 19.9% of the common stock of the Company and 85.0% of the
outstanding equity of the Company (assuming the Series X Preferred Stock is converting at a ratio of 1,000:1) immediately following the
First Effective Time, which following stockholder approval will allow the Series X Preferred Stock to convert to common stock of the
Company which may result in the holders of Predecessor ENvue to own 85% of the common stock of the Company, and (ii) the holders of our
outstanding equity immediately prior to the First Effective Time own 80.1% of the common stock of the Company and 15.0% of the outstanding
equity of the Company (assuming the Series X Preferred Stock is converting at a ratio of 1,000:1) immediately following the First Effective
Time, which following stockholder approval which will allow the Series X Preferred Stock to convert to common stock of the Company which
may result in our holders owning 15% of common stock of the Company.
Debenture Financing and Senior Convertible
Debenture
On February 13, 2025, we entered into a Securities
Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which
we sold in a private placement, a senior convertible debenture (the “Debenture”) due the earlier of (i) the date that is
the 30-day anniversary of the effective date of stockholder approval (the “Debenture Stockholder Approval”) of the issuance
of the shares of common stock upon the conversion of the debenture (the “Debenture Financing”) and (ii) the date that is
nine months following the date of issuance of the Debenture (“Maturity Date”), having an aggregate principal amount of $500,000.
The closing of the Debenture Financing occurred on February 14, 2025.
On March 26, 2025 we amended
and restated the Debenture to increase the Principal Amount to $1,300,000 to provide for the funding by Alpha Capital Anstalt (the “Investor”)
to our subsidiary ENvue Medical Holdings, Corp. (“ENvue”), a wholly owned subsidiary of the Company of (i) an
aggregate of $250,000 by the Investor to ENvue on February 6, 2025, (ii) an aggregate of $250,000 by the Investor to ENvue on March 4,
2025, and (iii) and an aggregate of $300,000 by the Investor to ENvue on March 26, 2025.
On the Maturity Date, we shall pay the Investor in
cash or, at the option of the Investor, in the form of conversion shares, or a combination thereof, the entire outstanding principal
amount of the Debenture, together with accrued and unpaid interest thereon, the applicable exit fee and any other amounts due thereunder.
Following the receipt of Debenture Stockholder Approval, the Debenture shall be convertible, in whole or in part, into shares of common
stock, at the option of the Investor, at the initial conversion price of $0.8906 (the “Conversion Price”), which is subject
to customary anti-dilution adjustments, and which such Conversion Price shall not be lower than the floor price of $0.97812. The Debenture
bears interest at the rate of 8.0% per annum, payable on the Maturity Date.
On February 13, 2025, as amended on March 26,
2025, in connection with the Purchase Agreement and issuance of the Debenture, we entered into that certain Registration Rights
Agreement (the “Registration Rights Agreement”) with the Investor. Pursuant to the Registration Rights Agreement, the
Company is required to prepare and file a resale registration statement with the SEC within 30 calendar days following the closing
date of the amended Debenture Financing (the “Filing Deadline”). The Company shall use its commercially reasonable
efforts to cause such registration statement to be declared effective by the SEC within 60 calendar days of the Filing Deadline (or
within 90 calendar days if the SEC reviews the resale registration statement).
January 2025 3(a)(9) Exchange
On January 7, 2025, we entered into a securities
exchange agreement (the “Exchange Agreement”) with a certain institutional investor pursuant to which we agreed to issue
an aggregate of (i) 41,498 shares of common stock (the “3(a)(9) Shares”), (ii) a warrant to purchase up to 158,562
shares of common stock (the “January 2025 Warrant”), and (iii) a pre-funded warrant to purchase up to 178,132 shares
of common stock (the “January 2025 Pre-Funded Warrant”), in exchange for the A-1 Warrant held by the Holder to purchase
up to 264,271 shares of common stock at an exercise price of $16.17 per share (the “Exchange”). We cancelled the A-1
Warrant reacquired in the Exchange and the A-1 Warrant will not be reissued. The January 2025 Warrant has substantially the same
terms as the A-1 Warrant, except that the shares of common stock issuable upon exercise of the January 2025 Warrant are subject to
stockholder approval pursuant to the applicable rules and regulations of the Nasdaq, is exercisable for a term of five and one half
years from the date such stockholder approval is received and deemed effective under Delaware law, and has an exercise price of
$6.8296 per share.
Subsequent to the Exchange, the holder of the
January 2025 Pre-Funded Warrant exercised the January 2025 Pre-Funded Warrant in full on a cashless basis in full for an aggregate
of 228,354 shares of common stock.
The issuance in the Exchange of the 3(a)(9) Shares,
the January 2025 Warrant, the January 2025 Pre-Funded Warrant and the shares of common stock issuable upon the exercise thereof pursuant
to the Exchange Agreement was made in reliance on an exemption from registration under Section 3(a)(9) of the Securities Act
Nano OpCo’s Business
Nano OpCo’s primary products, which are in
various stages of clinical and market development, currently consist of:
Each of UroShield, PainShield, and WoundShield employs
a small, disposable transducer that transmits low frequency, low intensity ultrasound acoustic waves that seek to repair and regenerate
tissue, musculoskeletal and vascular structures, and decrease biofilm formation, reduce blockage, and reduce pain related to urinary
catheters as well as reducing incidence of associated urinary tract infections. Through their size, effectiveness and ease of use, these
products are intended to eliminate the need for technicians and medical personnel to manually administer ultrasound treatment through
large transducers, thereby promoting patient independence and enabling more cost-effective home-based care.
PainShield MD is currently cleared for marketing
in the United States by the FDA. In September 2020, the FDA exercised its policy of enforcement discretion (“Enforcement Discretion”)
to allow distribution of the UroShield device in the U.S. during the COVID-19 pandemic. While the U.S. government has declared an end
to the public health emergency and had terminated Enforcement Discretion use for many medical devices, as of the date of this filing,
we have not been notified of any change in the regulatory status for the use of our UroShield device. However, we have removed the product
from the US market and have ceased all sales activities. Both PainShield and UroShield have CE Mark approval in the European Union, which
also permits sales in India and Ecuador, and a certificate allowing us to sell PainShield and UroShield in Israel. We have consummated
sales of PainShield and UroShield in the relevant markets, and we saw sales increase in 2024. WoundShield has not generated significant
revenue to date. Outside of the United States, we generally apply, through our distributor, for approval in a particular country for
a particular product only when we have a distributor in place with respect to such product.
In the United States, PainShield and UroShield require
a prescription from a licensed healthcare practitioner. If FDA clearance is obtained, we anticipate that WoundShield will require a prescription
from a licensed healthcare practitioner in the United States. As stated previously, UroShield was approved through the FDA under Enforcement
Discretion initially, for the duration of the COVID-19 pandemic and was intended to be sold directly to health care facilities and individuals.
Individuals would have required a prescription, but healthcare facilities would have deployed the use of Uroshield based upon clinical
need. However, in other countries in which we sell PainShield, UroShield, and WoundShield, such products are eligible for sale without
a prescription.
Insurance Coverage and Reimbursement
In addition to the need to obtain regulatory approvals,
we anticipate that sales volumes and prices of NanoVibronix’s UroShield and PainShield, products will depend in large part on the
availability of insurance coverage and reimbursement from third party payers. Third party payers include governmental programs such as
Medicare and Medicaid and the Veterans Health Care network of facidlities in the United States, private insurance plans and workers’
compensation plans. We do not currently have reimbursement codes for use of WoundShield in any of the markets in which we have regulatory
authority to sell WoundShield. Of the markets in which we have regulatory authority to sell PainShield, prior to January 2020, we only
had reimbursement codes in the United States (i.e., CPT codes) for clinical use only. Effective as of January 2020, the U.S. Centers
for Medicare and Medicaid Services (“CMS”) approved our PainShield for reimbursement for Medicare beneficiaries on a national
basis. However, PainShield was not assigned a reimbursement value from CMS. The Company was denied reimbursement in September 2022 due
to a lack of “life-cycle” testing. The Company had engaged Carmel Labs in Israel to conduct this testing and submitted the
results to CMS with our 2023 application on January 3, 2023. On August 21, 2023, CMS, denied reimbursement with respect to PainShield
due to their request for additional longevity testing. We are currently evaluating whether to resubmit another application to CMS.
With respect to UroShield, which may be used in a
clinical and home setting, we currently have reimbursement in the United Kingdom (for supplies only), and throughout the VA system. We
are seeking reimbursement codes for use of our products in the markets in which we have regulatory authority, including the United States,
to sell such products. Our current ongoing research and planned research may facilitate our ability to obtain reimbursement codes, but
there is no guarantee that we will be successful in obtaining such codes quickly, or at all. We engaged Idonea Solutions, Inc., an FDA
consultant, to assist in our efforts to obtain clearance under the FDA’s policy of Enforcement Discretion, and obtain 510(k) clearance
which is still ongoing. During the past few of years the Company has entered into distribution partnerships for UroShield in the U.K.,
Australia, New Zealand, and Malta.
Nano OpCo’s Business Model
All of Nano OpCo’s products consist of a reusable
controller device and a disposable component, which includes a transducer, and in the case of PainShield, a 30-day supply of adhering
patches. The controllers have a life expectancy of three years, while the UroShield disposable transducer has a life expectancy of up
to a month and must be replaced to provide the intended therapy. The components are purchased by either the distributor or end user for
use in any of the intended applications. Once the controller is purchased by the end user, recurring revenue will be realized by purchases
of replacement disposables to the extent that the end user continues treatment with our product.
Nano OpCo’s products are intended to be distributed
directly by the us, independent distributors, and potential licensees. Distributor cost is discounted to account for their intended margins,
based upon purchase volumes and/or periodic purchase commitments, with the disposable transducer sold and distributed in the same fashion.
We currently have an established distributor network and are implementing certain criteria within such network to ensure the appropriate
assignment of a distributor or licensee. We are in the process of adding additional distributors to our network, and continue our efforts
to identify market leaders in various segments to private label both PainShield and UroShield.
We also have a direct sales component, where we sell
directly to consumers, in order to satisfy customer demand generated through on-line advertising and social media. We have seen an increase
in demand as a direct result of an expanded social media and on-line advertising presence.
Nano OpCo’s business plan continues to focus
on these types of transactions/agreements. We continue to focus on the foundational aspects of each respective product, including the
design and performance of each, the reimbursement, regulatory status, and quality control, in order to strengthen our position with prospective
partners.
Ultrasound Technology and Nano OpCo’s
Products
As noted above, Nano OpCo’s primary products
are based on the use of low frequency ultrasound, which delivers energy through mechanical vibrations in the form of sound waves. Ultrasound
has long been used in physical therapy, physical medicine, rehabilitation and sports medicine.
Our proprietary PainShield technology consists of
a small, thin (1 millimeter) transducer that is capable of transmitting ultrasonic acoustic waves onto treatment surfaces with a radius
of up to 10 centimeters beyond the transducer. This technology allows us to treat pain by securing our transducers to the skin with a
separate adhesive patch, and portable self-adhering acoustic patch, thereby eliminating the need for technicians and medical personnel
to manually administer ultrasound therapy, which should reduce the cost of therapy. Moreover, we believe that, based upon the body of
evidence, the delivery of ultrasound through our portable devices may provide a competitive advantage over other existing therapies marketed
for similar intended use(s) (e.g., to treat pain associated with muscle, tendon, and contractures), as our technology is positioned to
directly target the affected areas of the body within the scope of the applicable FDA clearance.
While there are currently a number of products on
the market that treat pain through ultrasound therapy, we believe that our products may be preferable in certain instances because they
are portable, without the requirement to be plugged into an outlet and they have a frequency of 100kHz (in contrast to other devices,
which have a frequency of closer to 1MHz and above), which means our products, when functioning as intended and in accordance with applicable
design specifications, should not produce excessive heat that can damage tissue. Therefore, our products (i) can be self-administered
by the patient without the need to be moved about the treated area by the patient or a clinician, (ii) can be applied for a significantly
longer period without the risk of tissue damage and (iii) do not require the use of gel. We are also aware of one product, the SAM®
Sport family of products, which received FDA approval after PainShield and has CE Mark approval, marketed by ZetrOZ, Inc., that we understand
may eliminate certain of these requirements and limitations, namely the requirement to be plugged in, the need for movement around the
treated area and the relatively short safe treatment period. However, we understand that this product does not generate surface acoustic
waves as our products do, which means that the treatment area is generally limited to that under the transducer, that the use of transmission
gel is still required, and that the transducer thickness is significantly greater than ours (approximately 1.5 cm). It is also our understanding
that the FDA has issued multiple contraindications for SAM® Sport, which do not apply to the PainShield product.
There has been an article published in 2019 on SAM®
Sport4 regarding clinical evidence demonstrating that ultrasound dose timing (i.e. daily treatment) and duration significantly impact
benefits and treatment results. We are aware of a prospective randomized, double-blinded, placebo-controlled study on the effects of
the long-duration low-intensity ultrasound treatment using SAM® Sport4 suggesting that ultrasound may be used as a conservative non-pharmaceutical
and non-invasive treatment option for patients with knee osteoarthritis.
In general, ultrasound offers the benefits by increasing
local blood circulation, increasing vascular wall permeability, promoting protein secretion, promoting enzymatic reactions, accelerating
nitric oxide production, promoting angiogenesis (the formation of new blood vessels from pre-existing vessels) and promoting fibroblast
proliferation (fibroblasts are a type of cell that play a critical role in soft tissue healing). We believe that the body of evidence,
and the positive therapeutic effect that ultrasound has for various indications, potentially provides for future product development
opportunities for us.
Conventional Ultrasound PainShield Ultrasound
Traditional ultrasound device and our portable
ultrasound patch-based device and a comparison of their energy distribution, where the X-axis represents treatment surface, and the Y-axis
represents ultrasound energy penetration depth within tissue.
The PainShield Plus was introduced in March 2022.
The new product design provides the same therapy as PainShield MD, but through two transducers which alternate in its duty cycle. This
dual transducer design provides for a broader treatment with three hours of therapy.
In a comparison of a traditional ultrasound device
and our portable ultrasound patch-based device, the bulk wave conventional ultrasound machines with handheld transducers distribute the
energy deeply into the body, as shown above in diagram (A) on the left. In comparison, our device distributes the energy on the surface,
as shown in diagram (B), thereby meaningfully increasing the treatment area. Our transducers may also be incorporated into treatment
patches, including patches that are designed to deliver medicine and other compounds through the skin. The generation and delivery of
low frequency ultrasound over a period of time to a specific area has been termed “targeted slow-release ultrasound”. We
believe that this delivery method of ultrasound may be comparable to that of slow-release medication in the pharmaceutical industry.
This “targeted slow-release” capability is intended to allow for more frequent targeting of the intended treatment area and
thus may result in a more effective therapeutic response.
Micro Vibrations Technology and Nano OpCo’s
Products
In a 2007 study, increase in mean blood flow to the
calf was higher in the vibration group than the placebo group. Improvements in local blood flow may be beneficial in the therapeutic
alleviation of pain or other symptoms resulting from acute or chronic injuries (C. Button et al., “The effect of multidirectional
mechanical vibration on peripheral circulation of humans”, University of Otago New Zealand, Clinical Physiology and functional
Imaging, 2007 27, p211-216). A study on the effect of whole body vibration on lower extremity skin blood flow suggests, that short duration
vibration alone significantly increases lower extremity skin blood flow, doubling skin blood flow for a minimum of 10 minutes following
treatment (Lohman et al., “The effect of whole body vibration on lower extremity skin blood flow in normal subjects”, Department
of Physical Therapy, Loma Linda university, USA, Med Sci Monit, 2007; 13(2) 71-76). Vibration has also been shown to stimulate angiogenesis
and growth factors such as vascular endothelial growth factor (Suhr F et al., “Effects of short-term vibration and hypoxia during
high intensity cycling exercise on circulating level of angiogenic regulators in humans”, J Appl Physiol, 2007, 103:474-483, Yue
Z. et al., “On the cardiovascular effects of whole-body vibration I. Longitudinal effects: hydrodynamic analysis”, Studies
Appl Math, 2007, 119:95-109).
Relative to soft tissue repair, it is well established
that increasing blood flow to the wound and peri-wound area helps accelerate the healing of ischemic wounds. Micro-vibrations applied
on the skin tissue increase local blood flow and oxygen delivery to the wound area and stimulate angiogenesis and growth factors that
are helpful for the wound healing process. Vibration therapy has been found to stimulate blood flow due to mechanical stresses of endothelial
cells resulting in increased production of nitric oxide and vasodilation, as well as increase soft tissue and skin circulation. (Maloney-Hinds
et al., “The Role of Nitric Oxide in Skin Blood Flow Increases due to vibration in healthy adults and adults with type 2 diabetes,”
School of Medicine, Loma Linda University. Ca. Diabetes Technology & Therapeutics, 2009 p. 39-43). In addition, micro vibrations
induce skin surface nerve axon reflex and type IIa muscle fibers contraction rates, resulting in vasodilation (Nakagami et al., “Effect
of vibration on skin blood flow in an in vivo microcirculatory model”, The University of Tokyo, Bio-Science Trends 2007; 1 (3):
161-166). Ten minutes of vibration therapy with laser doppler revealed a consistent increase in water content of the upper dermis (TJ
Ryan et al., “The effect of mechanical forces (vibration or external compression) on the dermal water content of the upper dermis
and epidermis, assessed by high frequency ultrasound”, Oxford Wound Healing Institute, Journal of Tissue Viability, 2001. Of import
with respect to diabetic wounds, in which a prolonged inflammatory phase occurs, vibration vasodilation has generated an indirect anti-inflammatory
action, mainly by suppression of nuclear factor-kβ, the key gene for inflammatory mediators (Sackner, M.A., “Nitric Oxide
is released into circulation with whole-body, periodic acceleration”, Chest 2005;127;30-39).
Urinary catheter usage is associated with pain and
discomfort caused by the friction between the catheter surface and the urethral tissue. Generally, this friction is treated by applying
lubricating gels and low friction catheter coatings. These methods are effective for a short term during the catheter insertion as the
lubricating gel is quickly absorbed into the surrounding tissue and loses its effect and the catheter coatings lose their lubricity within
a few days, as the coating is covered by a thin film of mucous.
Our UroShield product provides vibrations along the
surface of the urinary catheter that is in contact with urethral tissue. We believe that these vibrations create a continuous acoustic
lubrication effect along the surface of the indwelling catheter that is in contact with the surrounding tissue, thus reducing catheter-tissue
contact time, which may lessen trauma from urethra abrasion and adhesion. We have also shown in animals and in humans that the micro-vibration
technology can reduce the level of biofilm formation on urinary catheters.
Nano OpCo’s Products
Product Design, Packaging, Identity
All of our products were redesigned in the fourth
quarter of 2019, with an updated look and improved performance. These new designs were coupled with new branding, packaging, instructional
manuals, and marketing materials. Beginning in the fourth quarter of 2019, our manufacturing in China, Singapore, and Israel commenced
producing the redesigned products for distribution and delivered their first completed units in April 2020. We currently complete assembly
in our facilities in Israel. Even though our ability to assemble our products has not been affected by the current political environment,
we cannot predict if future events may cause delays. Our 2023 production run established an ample supply of devices and monthly disposable
kits. The completed products can be used as a platform for either PainShield or UroShield. We do not anticipate a need to manufacture
additional devices through 2024. However, due to an increased demand of disposable monthly kits, we continue to produce at a high rate
to meet demand.
UroShield
UroShield is intended to prevent bacterial colonization
and biofilm formation, increase antibiotic efficacy in the catheter lumen and decrease pain and discomfort associated with urinary catheter
use. It is designed to be used with any type of indwelling urinary catheter regardless of the material or coating. Use of the device
is contraindicated for use while there is an active UTI. We believe that UroShield may be the first medical device on the market that
attempts to simultaneously address all of the aforementioned catheter-related issues. UroShield is similar in design to PainShield, in
that it uses a driver unit that produces low frequency, low intensity ultrasound. The driver unit connects to a disposable transducer
that is clipped onto the external portion of the catheter to deliver ultrasound therapy to all catheter surfaces as well as the tissue
surrounding the catheter.
Picture of UroShield with actuator
Clinical studies of the UroShield system have supported
the following advantageous effects:
UroShield has undergone a number of clinical trials.
The Heidelberg 1 trial, conducted in 2005-2006, which we sponsored, was a 22-patient randomized, double blind, sham-controlled, independent
trial that tested UroShield’s safety and ability to prevent biofilm in patients with an indwelling Foley catheter. The trial demonstrated
that UroShield prevented biofilm in all patients with the active device as compared to biofilm being found in seven of eleven of the
control patients. In addition, there was a marked decrease in pain, discomfort and spasm in the active UroShield patients, as evidenced
by a statistically significant decrease in the requirement for the medications required to treat urinary catheter associated pain and
discomfort (Ikinger U, “Biofilm Prevention by Surface Acoustic Nanowaves: A New Approach to Urinary Tract Infections?,” 25th
World Congress of Endourology and SWL, Cancun, Mexico, October 2007).
In a subsequent physician-sponsored trial, known
as Heidelberg 2, conducted in 2007, 40 patients who underwent radical prostatectomies were divided into two groups, with the active group
receiving one intra-operative dose of antibiotics and UroShield and the control group receiving one intra-operative dose of antibiotics
and then five subsequent doses over three days. At the end of the trial, the control group had four cases of bacteriuria, as compared
to one in the active group. In a third trial, a physician-sponsored open label trial, 10 patients who received emergency placement of
a urinary catheter due to acute obstruction were given a UroShield device and followed with regard to their pain, discomfort, spasm and
overall well-being. Within 24 hours, all patients showed improvement and increased toleration of the catheter (Zillich S., Ikinger U,
“Biofilmprävention durch akustische Nanowellen: Ein neuer Aspekt bei katheterassoziierten Harnwegsinfektionen?,” Gesellschaft
für Urologie, Heilbronn, Germany, May 2008). We supplied devices for this trial, but had no further involvement with it.
In 2022, the Company submitted to The National Institute
for Health and Care Excellence, for review, the findings from an independent evaluation of its UroShield device on patients who had used
the device for up to two years. Clinical data from the study conducted during 2020 by Coventry University’s Assistant Professor,
Ksenija Maravic da Silva, reported statistically significant outcomes for the device including a reduced number of UTIs, reduced instances
of prescribed antibiotics, reduced catheter blockages, reduced need for unplanned catheter changes and reduced pain reported as a result
of catheter associated complications. The study also provided important insights into the lives of those using the device, including
improvement of overall well-being, relating specifically to decreased levels of worry and increased ability to socialize. In addition,
patient feedback on product improvements was addressed and has been incorporated in the present commercially available device.
In September 2022, UroShield was approved for sale
by the NHS internal supply organization, NHS Supply Chain.
This contract with NHS Supply Chain provides dedicated
end-to-end supply chain service of our UroShield for every NHS healthcare organization. UroShield will be available to all patients who
need the device with full clinical support, through the NHS supply chain. It represents a significant opportunity for us to expand distribution
of UroShield as it will now be made available to all clinicians and their patients through the NHS organization’s own supply channel.
NHS Supply Chain manages the sourcing, delivery and supply of healthcare products and services for NHS trusts and healthcare organizations
across England and Wales. The organization processes more than eight million orders per year across 94,000 order points and 17,465 locations
serving as an integral part of the national healthcare system in the U.K. We are ramping up production to meet increase in demand that
we anticipate as a result of this exciting development.
The original contract, which is designed to provide
new innovative products for healthcare providers, began in October 2022, and the recent extension signed in the fall of 2023, will merge
with the existing Urology and Stoma framework contract in February 2024 with optional extension periods.
Under the contract, NHS Supply Chain describes UroShield
as a disposable ultrasound device designed to reduce the risk of CAUTI by reducing bacterial colonization and biofilm formation on indwelling
urinary catheters. This ultimately translates into improved outcomes for patients and care provides, reduces the need for antibiotics,
catheter changes and washouts and incidence of hospital visits, thereby reducing nursing time, bed days and ambulance transfers.
In the fourth quarter of
2024, we announced our entry a product and market evaluation with two prominent distributors for UroShield. These distributors will cover
Israel and South Africa.
Apogepha LOI and Term
Sheet
We and our UK distributor
are in advanced discussions with NHS to expand coverage of UroShield. In December 2023, we announced we entered into a non-binding letter
of intent (the “LOI”) with Apogepha Arzneimittel GmbH (“Apogepha”) in which both parties will analyze the potential
for Apogepha to distribute our UroShield product in Germany and other European markets. Pursuant to the terms of the LOI, Apogepha will
commence a comprehensive market research study on how UroShield can fit into the pathway of care for patients with long term catheters.
The goal of the LOI, and subsequent findings, will be for both us and Apogepha to better understand the feasibility of a distribution
deal between both companies.
On October 9, 2024, we announced
that we and Apogepha had entered into a non-binding term sheet for the purpose of appointment of exclusive distributorship throughout
Germany. Both parties intend to enter into a biding agreement early in 2025.
A definitive and binding
partnership agreement is predicated upon successfully obtaining reimbursement through the GKV-SV German Health Reimbursement Authority.
The application for reimbursement has been submitted on behalf of Apogepha late in 2024.
Standalone Services Agreement
with Veranex, Inc.
In March 2024, we entered
into a standalone services agreement (the “Veranex Agreement”) with Veranex, Inc. (“Veranex”), to provide certain
research and development services to assist with the development of our next generation of UroShield and PainShield products. The Veranex
Agreement has a term of approximately 50 weeks, subject to adjustments or earlier termination thereof in accordance with the terms of
the Agreement, with estimated fees and expenses of up to approximately $1.1 million subject to certain adjustments, including among other
things, revising the agreement in the event of changing assumptions or facts, unforeseen development deviations, or changes in scope.
We expect engineering of the new technology to eventually allow us to find a US manufacturing partner once the development process has
been completed.
In December 2024, Veranex
completed the first element of the “next-gen” product development process. Prototypes of both the device and transducer element
were provided to our management team. It is anticipated that the completion of the process to be in the first half of 2025.
Market for UroShield
According to the Centers for Disease Control and
Prevention, UTI is an infection involving any part of the urinary system, including urethra, bladder, ureters, and kidney. UTIs are the
most common type of healthcare-associated infection reported to the National Healthcare Safety Network (NHSN). Among UTIs acquired in
the hospital, approximately 75% are associated with a urinary catheter, which is a tube inserted into the bladder through the urethra
to drain urine. Approximately 15-25% of patients who are admitted to a hospital will have an indwelling catheter at some point during
their stay and 7% of nursing home residents are managed by long term catheterization. The most important risk factor for developing a
catheter-acquired urinary tract infection (CAUTI) is prolonged use of the urinary catheter.
CAUTI is the most common nosocomial infection in
hospitals and nursing homes, representing over 40% of all hospital-acquired infections (HAIs) and 20% of intensive care unit HAIs (Maki,
P and Tambyah, D. Engineering Out the Risk for Infection with Urinary Catheters., Emerging Infectious Diseases., Vol. 7, No. 2, March-April
2001). In addition, CAUTIs are the source for approximately 20% of healthcare acquired bacteremia in acute care and 50% in long-term
care facilities (Nicolle, Lindsay E. “Catheter Associated Urinary Tract Infections.” Antimicrobial Resistance and Infection
Control 3 (2014)). The risk of acquiring CAUTI depends on the method and duration of catheterization and patient susceptibility. Patients
requiring a urinary catheter have a daily risk of approximately five percent of developing bacteriuria and approximately 25% of patients
develop nosocomial bacteriuria or candiduria over one week (Maki, P and Tambyah, D. Engineering Out the Risk for Infection with Urinary
Catheters., Emerging Infectious Diseases., Vol. 7, No. 2, March-April 2001). Virtually all patients requiring indwelling urinary catheters
for longer than a month become bacteriuric.
CAUTI occurs because urethral catheters inoculate
organisms into the bladder and promote colonization by providing a surface for bacterial adhesion and causing mucosal irritation. The
presence of a urinary catheter is the most important risk factor for bacteriuria. Once a catheter is placed, the daily incidence of bacteriuria
is 3-10%. Between 10% and 30% of patients who undergo short-term catheterization (i.e., 2-4 days) develop bacteriuria and are asymptomatic.
Between 90% and 100% of patients who undergo long-term catheterization develop bacteriuria. About 80% of nosocomial UTIs are related
to urethral catheterization; only 5-10% are related to genitourinary manipulation. (John L. Brusch, “Catheter-Related Urinary Tract
Infection”, Medscape, August 18, 2015).
The global catheter market size was valued at USD
37.3 billion in 2018 and is expected to witness a CAGR of 9.7% through 2026. Rising prevalence of chronic disorders leading to hospitalization
has fueled the growth of this market. The presence of multi-national manufacturers, improving medical facilities, supportive insurance
policies are also some of the key factors propelling the market growth. North America is the largest regional market due to the presence
of multi-national manufacturers and sophisticated healthcare infrastructure along with high product awareness levels. Asia Pacific is
projected to expand at the maximum CAGR of 10.4%, over the study period. According to a Grandview research report published 2018, there
are 25 million Foley catheters sold annually in the United States and 75 million catheters sold elsewhere yielding a total global Foley
catheter market of 100 million units worldwide. The cost to treat a simple CAUTI has been estimated at $13,793 per case (AHRQ), and the
cost of treating bacteremia has been estimated at $8,355 (NIH) per case, yielding a total healthcare burden of $830 million per year.
While there are currently both antibiotic and silver coated catheters in the market, they often sell for approximately $10 above the
non-antimicrobial equivalent.
In addition, for discharges on or after October 1,
2008, Medicare stopped authorizing its payment to hospitals in which patients have developed a catheter-associated urinary tract infection
that was not present on admission. This provides hospitals in the United States with a substantial financial incentive to reduce the
occurrence of such infections through the use of products such as UroShield, which help prevent infections hospitals would otherwise
have to treat without reimbursement. In addition, it has been noted that the Centers for Medicare & Medicaid Services may fine hospitals
in the future when their patients develop CAUTI, which will likely increase the incentive of hospitals to invest in technologies that
may prevent this complication (Brown J, et al. “Never Events: Not Every Hospital-Acquired Infection Is Preventable, Clinical Infectious
Diseases, 2009, 49 (5)).
Competition for UroShield
Several types of products have been introduced to
address the growing problem of catheter-acquired infection and biofilm formation on catheter surfaces. Manufacturers offer antibiotic-coated
and antiseptic-impregnated catheters. In addition, manufacturers have produced silver-coated catheters, which have been shown in small
studies to delay bacteriuria for about two to four days. However, larger studies did not corroborate this result; on the contrary, silver
hydrogel was associated with overgrowth of gram positive bacteria in the urine (Riley DK, Classen DC, “A large randomized clinical
trial of a silver-impregnated urinary catheter: lack of efficacy and staphylococcal superinfection,” Am. J. Med. 1995 April; 98(4):349-56).
UroShield has been designed to be added to any type
of catheter, including Foley catheters and silver-coated catheters, to improve a catheter’s infection prevention performance. However,
in the United States, we do not have the requisite regulatory authorization to market UroShield for such use, as we have not yet obtained
FDA clearance or approval for UroShield, and the FDA’s temporary, COVID-19 related policy of Enforcement Discretion under which
we had previously marketed UroShield since September 2020 expressly excludes use with a coated catheter. As of the date of this filing,
we have removed the product from the US market and have ceased all sales activities. UroShield is not intended to replace any existing
products or technologies, but instead is intended to assist these existing products or technologies in preventing catheter-acquired urinary
injury and catheter associated complications.
Regulatory Strategy
UroShield received CE Mark approval in September
2007 and was also approved for sale by the Israeli Ministry of Health in 2008. We have maintained our CE mark approval until now and
expect that to continue going forward. We are able to sell UroShield in India and Ecuador based on our CE Mark. UroShield was granted
a Canadian medical device license in September 2016, although, due to a modification of regulatory standards in Canada, we have lost
our Canadian license. We are working toward reinstatement of our Canadian license. To that extent, we passed an audit in or around October
2022.
In the European Union, UroShield has been marketed
for the prevention of CAUTI and biofilm formation, decreased pain and discomfort associated with urinary catheters and increased antibiotic
efficacy.
In September 2020, the FDA exercised its Enforcement
Discretion to allow distribution of the UroShield device in the United States. According to the FDA, “UroShield® device could
use Intended Use Code (IUC) 081.006: Enforcement discretion per final guidance, and FDA product code QMK (extracorporeal acoustic wave
generating accessory to urological indwelling catheter for use during the COVID-19 pandemic)”.
Accordingly, the FDA’s Enforcement Discretion
temporarily cleared the way for import of UroShield to the U.S. during the COVID-19 pandemic, immensely expanding the company’s
addressable market for the device during this time period. As of the date of this report, we have not been notified of any change in
our Enforcement Discretion status, however, we have removed the product from the US market and have ceased all sales activities. The
device is designed to aid in the prevention of CAUTI incidence in patients requiring long-term indwelling catheterization, defined as
14 days or greater.
We believe the evidence presented to the FDA on UroShield
demonstrated decreases in the risk of catheter-associated urinary tract infections and related complications in patients using UroShield
who required long-term indwelling catheterization. We intend to seek long-term marketing authorization from the FDA through the De
Novo classification process for UroShield, which is a premarket pathway intended for devices that cannot pursue 510(k) clearance