美國
證券和交易委員會
華盛頓特區 20549
表格
（標記一）
截至季度結束日期的財務報告
或者
過渡期從__________到_____________
委託文件編號：001-39866
| (根據其章程規定的註冊人準確名稱) |
| （合併的）主權或其他管轄區 | （內部稅務服務僱主識別號碼） |
（總部地址）（郵編）
註冊人的電話號碼，包括區號:(
不適用
如果表8-K的提交旨在同時滿足公司在以下規定中的任意一項下的提交義務，請勾選適當的下面的方框：
根據1933年證券法第12(b)條款註冊的證券:
| 每一類的名稱 | 交易標誌 | 在其上註冊的交易所的名稱 | ||
| 該 股票市場 有限責任公司 | ||||
| 該 股票市場 有限責任公司 |
請在檢查標記處打鉤，以表示註冊人:
(1)在過去12個月內是否已按照1934年證券交易法第13節或第15(d)節的規定提交了所有需要提交的報告（或在註冊人需要提交這些報告的較短期間內提交了這些報告），(2)是否已經在過去90天內受到文件提交要求的約束。
請在檢查標記旁邊選擇以下方框：是否已根據證券交易委員會規則12b-2中「大型加速文件提交人」的定義，以及「加速文件提交人」，「小型報告公司」和「新興成長公司」將其分類爲大型加速文件提交人，加速文件提交人，非加速文件提交人，小型報告公司或新興成長公司。
請選擇相應的複選框以指示註冊人是大型加速歸檔者、加速歸檔者、非加速歸檔者、小型報告公司還是新興增長型公司。請參閱《交易所法》第12億.2規則中「大型加速歸檔者」、「加速歸檔者」、「小型報告公司」和「新興增長型公司」的定義。
| 大型加速報告人 | ☐ | 加速文件提交人 | ☐ |
| ☒ | 較小的報告公司 | ||
| 新興成長公司 |
如果公司是新興成長型公司，請在選中的方框內打勾，以表示公司已選擇不使用根據交易法第13(a)條規定提供的任何新的或修訂的財務會計準則的延長過渡期來符合這些新的或修訂的財務會計準則。
請用勾號表示註冊登記者是否爲殼公司（如《交易所法》第120億.2條所定義）。是 ☐ 否
截至2024年11月14日，已經發行和流通的公司普通股有 註冊人的普通股，每股面值$0.00001，發行在外。
關於前瞻性聲明的特別說明
本季度10-Q表格中包含關於我們及我們所在行業的前瞻性表述，涉及大量風險和不確定性。本季度10-Q表格中包含的所有除歷史事實陳述外的陳述，包括有關我們策略、未來財務狀況、未來經營、預期成本、前景、計劃、管理層目標和預期市場增長的陳述，均屬於前瞻性描述。在某些情況下，你可以通過術語識別前瞻性表述，比如「目標」、「預期」、「假定」、「相信」、「考慮」、「繼續」、「可能」、「設計」、「到期」、「估計」、「期望」、「目標」、「打算」、「可能」、「客觀」、「計劃」、「定位」、「潛在」、「預測」、「尋求」、「應當」、「目標」、「願意」及其他類似表達，這些表述都是對未來事件和未來趨勢的預測，或者這些術語的否定形式或其他類似術語。
儘管我們相信，在本季度報告的表格10-Q中包含的每一個前瞻性陳述都有合理依據，但我們無法保證未來的結果、活動水平、表現或前瞻性陳述中反映的事件和情況將會被實現或根本發生。前瞻性陳述受到風險和不確定性的影響，這些風險和不確定性可能導致實際結果與所指示的結果有重大不同（無論是有利還是不利）。這些風險和不確定性包括但不限於公司年度報告10-k中描述的風險因素部分，報告日期爲2023年12月31日（10-K表格）於2024年3月28日提交給證券交易委員會，根據規則424(b)(4)進行存檔。不應過分依賴任何此類前瞻性陳述。除非法律要求，我們將不會公開更新任何前瞻性陳述，無論是由於新信息、未來事件或其他原因。
您應該完整閱讀此季度報告（10-Q表格）及我們在此季度報告中提到的文件，以及作爲附件提交的文件，並理解我們的實際未來結果可能與預期存在重大差異。我們對本季度報告（10-Q表格）中的所有前瞻性聲明進行了這些警示說明的限定。
| 2 |
目錄
| 頁面 | |||
| 第I部分 | 財務信息 | ||
| 項目 1. | 基本報表 | 4 | |
| 簡明資產負債表 | 4 | ||
| 經簡化的損益表 | 5 | ||
| 壓縮的股東權益變動表 | 6 | ||
| 現金流量簡明報表 | 8 | ||
| 基本財務報表附註。 | 9 | ||
| 項目 2. | 分銷計劃 | 24 | |
| 第三項。 | 有關市場風險的定量和定性披露 | 32 | |
| 第四項。 | 控制和程序 | 32 | |
| 第二部分 | 其他信息 | ||
| 項目 1。 | 法律訴訟 | 34 | |
| 項目1A。 | 風險因素 | 34 | |
| 項目 2。 | 未註冊的股票股權銷售和籌款用途 | 34 | |
| 項目 3. | 對優先證券的違約 | 34 | |
| 項目 4. | 礦山安全披露 | 34 | |
| 項目5。 | 其他信息 | 34 | |
| 項目6。 | 展示資料 | 35 | |
| 簽名 | 37 |
| 3 |
第一部分——財務信息
項目1.基本報表。
Aclarion公司
簡化資產負債表
九月三十日 2024 | 12月31日 2023 | |||||||
| (未經審計) | ||||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 受限制現金 | ||||||||
| 應收賬款，淨額 | ||||||||
| 預付和其他流動資產 | ||||||||
| 總流動資產 | ||||||||
| 非流動資產： | ||||||||
| 物業及設備（淨額） | ||||||||
| 無形資產，淨值 | ||||||||
| 總非流動資產 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債與股東權益（赤字） | ||||||||
| 流動負債： | ||||||||
| 應付賬款 | $ | $ | ||||||
| 應計及其他負債 | ||||||||
| 應付票據，扣除折扣後 | ||||||||
| Warrants負債 | ||||||||
| 衍生負債 | ||||||||
| 發行股權的負債 | ||||||||
| 總流動負債 | ||||||||
| 總負債 | ||||||||
| 股東權益（赤字） | ||||||||
| 普通股 - $ 面值， 已授權 和 已發行並流通的股份（見附註11） | ||||||||
| B系列優先股 - $ 面值， 授權的和 和 已發行和流通的股份（見附註11） | ||||||||
| C系列優先股 - $ 面值， 授權的和 和 已發行並流通的股份（見註釋11） | ||||||||
| 額外實收資本 | ||||||||
| 累計虧損 | ( | ) | ( | ) | ||||
| 股東權益（赤字）總額 | ( | ) | ||||||
| 總負債和股東權益（赤字） | $ | $ | ||||||
請參閱附帶的簡化基本報表的說明。
| 4 |
Aclarion公司
簡化營業報表
(未經審計)
截止三個月 九月三十日 | 截止九個月 九月三十日 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 營業收入 | ||||||||||||||||
| 營業收入 | $ | $ | $ | $ | ||||||||||||
| 營收成本 | ||||||||||||||||
| 毛利潤（虧損） | ( | ) | ( | ) | ( | ) | ||||||||||
| 營業費用： | ||||||||||||||||
| 銷售和市場營銷 | ||||||||||||||||
| 研究和開發 | ||||||||||||||||
| 一般管理費用 | ||||||||||||||||
| 總營業費用 | ||||||||||||||||
| (運營虧損) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收入（費用）： | ||||||||||||||||
| 利息支出 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 債務交換損失 | ( | ) | ( | ) | ||||||||||||
| 債務滅失損失 | ( | ) | ||||||||||||||
| 權證和衍生負債的公允價值變動 | ||||||||||||||||
| 其他，淨數 | ||||||||||||||||
| 其他總收入（費用） | ( | ) | ( | ) | ||||||||||||
| 稅前收入（虧損） | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得稅準備金 | ||||||||||||||||
| 凈利潤（虧損） | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 優先股股東應計分紅 | ( | ) | ( | ) | ||||||||||||
| 可分配給普通股東的凈利潤（虧損） | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 可分配給普通股股東的每股凈利潤（虧損） | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| 流通在外的普通股加權平均股數，基本和稀釋 | ||||||||||||||||
請參閱附帶的簡化基本報表的說明。
| 5 |
Aclarion公司
股東權益（赤字）變動的簡明報表
(未經審計)
| A輪 | B輪 | C系列 | ||||||||||||||||||||||
| 優先股 | 優先股 | 優先股 | ||||||||||||||||||||||
| 股份 | 價值 | 股份 | 價值 | 股份 | 價值* | |||||||||||||||||||
| 截至2022年12月31日的餘額 | $ | $ | $ | |||||||||||||||||||||
| 基於股份的薪酬 | – | – | – | |||||||||||||||||||||
| 出售A系列優先股所得 | – | – | ||||||||||||||||||||||
| 贖回A系列優先股 | ( |
) | ( |
) | – | – | ||||||||||||||||||
| 凈利潤（虧損） | – | – | – | |||||||||||||||||||||
| 餘額，2023年3月31日 | $ | $ | $ | |||||||||||||||||||||
| 基於股份的薪酬 | – | – | – | |||||||||||||||||||||
| 承諾股份 - 注：融資 | – | – | – | |||||||||||||||||||||
| 發行Warrants - 注：融資 | – | – | – | |||||||||||||||||||||
| 凈利潤（虧損） | – | – | – | |||||||||||||||||||||
| 截至2023年6月30日的餘額 | $ | $ | $ | |||||||||||||||||||||
| 基於股份的薪酬 | – | – | – | |||||||||||||||||||||
| 普通股發行 | – | – | – | |||||||||||||||||||||
| 發行Warrants - 注意融資 | – | – | – | |||||||||||||||||||||
| 凈利潤（虧損） | – | – | – | |||||||||||||||||||||
| 餘額，截至2023年9月30日 | $ | $ | $ | |||||||||||||||||||||
| 截至2023年12月31日的餘額 | $ | $ | $ | |||||||||||||||||||||
| 基於股份的薪酬 | – | – | – | |||||||||||||||||||||
| 與限制性股票單位相關的普通股發行 | – | – | – | |||||||||||||||||||||
| 普通股發行 - 股權信貸額度 | – | – | – | |||||||||||||||||||||
| 承諾股的發行 - 注意融資 | – | – | – | |||||||||||||||||||||
| 無現金行使預先融資的Warrants | – | – | – | |||||||||||||||||||||
| 與公開募股相關的普通股和Warrants的發行，淨髮行成本 | – | – | – | |||||||||||||||||||||
| 公開發行和信貸額度發行成本 | – | – | – | |||||||||||||||||||||
| 普通股發行 - 債務轉股 | – | – | – | |||||||||||||||||||||
| 與反向拆股相關的轉換 | – | – | – | |||||||||||||||||||||
| 凈利潤（虧損） | – | – | – | |||||||||||||||||||||
| 餘額，2024年3月31日 | $ | $ | $ | |||||||||||||||||||||
| 基於股份的薪酬 | – | – | – | |||||||||||||||||||||
| 與限制性股票單位相關的普通股發行 | – | – | – | |||||||||||||||||||||
| 普通股發行 - 股權信用額度 | – | – | – | |||||||||||||||||||||
| 凈利潤（虧損） | – | – | – | |||||||||||||||||||||
| 餘額，2024年6月30日 | $ | $ | $ | |||||||||||||||||||||
| 基於股份的薪酬 | – | – | – | |||||||||||||||||||||
| 與限制性股票單位相關的普通股發行 | – | – | – | |||||||||||||||||||||
| 與RegA+相關的普通股發行 | – | – | – | |||||||||||||||||||||
| 發行b類優先股 - 債務與股權交換 | – | – | ||||||||||||||||||||||
| b類優先股發行成本 | – | – | – | |||||||||||||||||||||
| c類優先股發行成本 | – | – | – | |||||||||||||||||||||
| 發行c類優先股 | – | – | ||||||||||||||||||||||
| 普通股發行費用 | – | – | – | |||||||||||||||||||||
| 發行c類權證 | – | – | – | |||||||||||||||||||||
| 發行RegA+權證 | – | – | – | |||||||||||||||||||||
| 資本化b類優先股送轉 | – | – | – | |||||||||||||||||||||
| 凈利潤（虧損） | – | – | – | |||||||||||||||||||||
| 餘額，2024年9月30日 | $ | $ | $ | |||||||||||||||||||||
(續)
| 6 |
Aclarion, Inc.
股東權益（赤字）變動的壓縮報表
（未經審計）
(續)
| 其他 | ||||||||||||||||||||
| 普通股 | 已支付的資本 | 累計 | ||||||||||||||||||
| Shares | 價值 | 資本 | Deficit | 總計 | ||||||||||||||||
| 餘額，2022年12月31日 | $ | $ | $ | ( |
) | $ | ||||||||||||||
| 基於股份的報酬 | – | |||||||||||||||||||
| A系列優先股的銷售所得 | – | |||||||||||||||||||
| A系列優先股的贖回 | – | ( |
) | |||||||||||||||||
| 淨利潤（虧損） | – | ( |
) | ( |
) | |||||||||||||||
| 截至2023年3月31日的餘額 | $ | $ | $ | ( |
) | |||||||||||||||
| 基於股份的報酬 | – | |||||||||||||||||||
| 承諾分享 - 附註融資 | ||||||||||||||||||||
| 發行Warrants - 附註融資 | – | |||||||||||||||||||
| 淨利潤（虧損） | – | ( |
) | ( |
) | |||||||||||||||
| 截至2023年6月30日的餘額 | $ | $ | $ | ( |
) | |||||||||||||||
| 基於股份的報酬 | – | |||||||||||||||||||
| 普通股的發行 | ||||||||||||||||||||
| 發行Warrants - 附註融資 | – | |||||||||||||||||||
| 淨利潤（虧損） | – | ( |
) | ( |
) | |||||||||||||||
| 餘額，2023年9月30日 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| 餘額，截至2023年12月31日 | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
| 基於股份的報酬 | – | |||||||||||||||||||
| 與限制性股票單位相關的普通股發行 | ||||||||||||||||||||
| 普通股發行 - 權益信貸額度 | ||||||||||||||||||||
| 承諾股份發行 - 票據融資 | ||||||||||||||||||||
| 預先資金Warrants的無現金行使 | ||||||||||||||||||||
| 與公開發售相關的普通股和Warrants發行，淨髮行費用 | ||||||||||||||||||||
| 公開發行和信貸發行成本 | – | ( |
) | ( |
) | |||||||||||||||
| 普通股發行 - 債務換股 | ||||||||||||||||||||
| 與反向股票拆分相關的四捨五入轉換 | ||||||||||||||||||||
| 淨利潤（虧損） | – | ( |
) | ( |
) | |||||||||||||||
| 餘額，截至2024年3月31日 | $ | $ | $ | ( |
) | |||||||||||||||
| 基於股份的報酬 | – | |||||||||||||||||||
| 與限制性股票單位相關的普通股發行 | ||||||||||||||||||||
| 普通股發行 - 股權信貸額度 | ||||||||||||||||||||
| 淨利潤（虧損） | – | ( |
) | ( |
) | |||||||||||||||
| 餘額，2024年6月30日 | $ | $ | $ | ( |
) | |||||||||||||||
| 基於股份的報酬 | – | |||||||||||||||||||
| 與限制性股票單位相關的普通股發行 | ||||||||||||||||||||
| 與RegA+相關的普通股發行 | ||||||||||||||||||||
| b系列優先股發行 - 債務換股 | – | |||||||||||||||||||
| b系列優先股發行成本 | – | ( |
) | ( |
) | |||||||||||||||
| c系列優先股發行成本 | – | ( |
) | ( |
) | |||||||||||||||
| 發行C系列優先股 | – | |||||||||||||||||||
| 普通股發行成本 | – | ( |
) | ( |
) | |||||||||||||||
| 發行C系列Warrants | – | |||||||||||||||||||
| 發行RegA+ Warrants | – | |||||||||||||||||||
| 對B系列優先股股息進行資本化 | – | ( |
) | |||||||||||||||||
| 淨利潤（虧損） | – | ( |
) | ( |
) | |||||||||||||||
| 餘額，2024年9月30日 | $ | $ | $ | ( |
) | |||||||||||||||
請參見附帶的簡明基本報表說明。
| 7 |
Aclarion, Inc.
現金流量表摘要
(未經審計)
| 截至九月三十日的九個月 | ||||||||
| 2024 | 2023 | |||||||
| 經營活動產生的現金流 | ||||||||
| 淨利潤（虧損） | $ | ( | ) | $ | ( | ) | ||
| 調整凈利潤（損失）與營業活動所使用的現金之間的差異： | ||||||||
| 折舊和攤銷 | ||||||||
| 基於股份的報酬 | ||||||||
| 債務交換的損失 | ||||||||
| 債務註銷損失 | ||||||||
| 遞延發行成本的攤銷 | ||||||||
| 與Warrants和衍生品相關的公允價值變動 | ( | ) | ( | ) | ||||
| 與橋接融資相關的非現金利息 | ||||||||
| 資產和負債的變動 | ||||||||
| 應收賬款 | ( | ) | ( | ) | ||||
| 預付賬款及其他流動資產 | ( | ) | ||||||
| 應付賬款 | ( | ) | ||||||
| 應計及其他負債 | ( | ) | ||||||
| 應付票據，扣除折扣 | ( | ) | ||||||
| 淨現金（用於）運營 | ( | ) | ( | ) | ||||
| 投資活動 | ||||||||
| 無形資產 - 專利 | ( | ) | ( | ) | ||||
| 投資活動產生的淨現金（使用） | ( | ) | ( | ) | ||||
| 融資活動 | ||||||||
| 與公開發行相關的普通股和Warrants的發行，扣除淨額 | ||||||||
| 股權融資的收益 | ||||||||
| 來自普通股和Warrants的RegA+發行收益 | ||||||||
| 來自C系列優先股和Warrants銷售的收益 | ||||||||
| 償還 promissory notes | ( | ) | ||||||
| 普通股現金髮行成本 | ( | ) | ||||||
| 優先股現金髮行成本 | ( | ) | ||||||
| 橋接基金現金髮行成本 | ( | ) | ( | ) | ||||
| 來自橋接融資的收益 | ||||||||
| A系列優先股的銷售所得 | ||||||||
| A系列優先股的贖回 | ( | ) | ||||||
| 融資活動提供的淨現金 | ||||||||
| 現金及現金等價物的淨增加（減少） | ( | ) | ||||||
| 現金、現金等價物及限制性現金，期初餘額 | ||||||||
| 現金、現金等價物及限制性現金，期末餘額 | $ | $ | ||||||
| 非現金活動 | ||||||||
| 優先股應計分紅派息 | ||||||||
| 將債務轉換爲優先股 | ||||||||
| 以債務爲交換而發行普通股 | ||||||||
| 發行橋接基金承諾股份 | ||||||||
| 與優先股相關的已發生發行費用 | ||||||||
| 與普通股相關的已發生發行費用 | ||||||||
| 將預付費用指定爲普通股發行費用 | ||||||||
| 與限制性股票單位相關的普通股發行 | ||||||||
| 與橋接融資相關的Warrants和衍生品的公允價值 | ||||||||
| 與橋接融資相關的債務發行費用 | ||||||||
| 與過渡融資相關的Warrants的發行 | ||||||||
| 與過渡融資相關的承諾分享的發行 | ||||||||
| 與過渡融資相關的原始發行折扣（15%） | ||||||||
請參見附帶的簡明基本報表說明。
| 8 |
Aclarion, Inc.
簡要基本報表附註
(未經審計)
注意 1. 公司及其財務報表編制基礎
本公司
Aclarion, Inc.，前身爲Nocimed, Inc.（「公司」或「Aclarion」）是一家醫療科技公司，利用磁共振光譜（「MRS」）和 一種專有生物標誌物來優化臨床治療。該公司成立於2015年2月，註冊於特拉華州，主要業務地點位於科羅拉多州布魯姆菲爾德。
財務報表基礎
附帶的簡化基本報表已按照美國普遍接受的會計原則（「GAAP」）和證券交易委員會（「SEC」）關於臨時財務信息的規則和規定編制。因此，它們不包括美國GAAP對於完整基本報表所要求的所有信息。臨時簡化基本報表反映了所有正常持續性質的調整，這些調整被認爲對於公正反映所示期間的結果是必要的，並且應與截至2023年12月31日的經審計基本報表及相關注釋一起閱讀，這些報表包括完整的腳註披露，包括我們的主要會計政策。2023年12月31日的簡化資產負債表是根據2023年12月31日的經審計基本報表得出的。它們應與我們在2024年3月28日向SEC提交的10-k表格年度報告中包含的基本報表及相關注釋一起閱讀。臨時期間的結果不一定代表可能期望的完整財年或任何其他未來期間的結果。
重分類
在2024年6月30日結束的六個月期間的季度報告10-Q表中的簡明現金流量表中，某些融資活動已被重新分類，以符合當前期間的呈現。
在截至2024年6月30日的六個月期間的10-Q季度報告中，現金流量報告的簡要報表包含單獨的行項，報告與我們普通股票融資活動相關的現金髮行成本，股權融資（$262,744）和公開發行（$256,094）。在截至2024年9月30日的九個月期間的10-Q季度報告中，現金流量報告的簡要報表包含一個行項，用於報告該期間所有普通股票融資活動的累計現金髮行成本。
這種重新分類對之前報告的淨利潤或淨資產沒有影響。
風險和不確定性
公司面臨着初創階段公司常常遇到的各種風險和不確定性。這些風險和不確定性包括但不限於：有限的運營歷史、來自其他公司的競爭、對額外資金的有限獲取、對關鍵人員的依賴，以及潛在快速增長的管理。爲了解決這些風險，公司必須在其他方面發展其客戶基礎；實施併成功執行其業務和營銷策略；開發後續產品；提供優質的客戶服務；以及吸引、留住和激勵合格人員。無法保證公司能夠成功應對這些或其他類似風險。
2024年反向股票分割
在2023年3月，公司股東批准了一項反向股票拆分提案，比例區間爲1比5到1比50，最終比例由公司的董事會自行決定，無需進一步獲得公司股東的批准。在2024年1月，公司董事會隨後批准了最終的反向股票拆分比例爲
由於2024年的拆股並股，除非另有說明，所有關於普通股、分享數據、每分享數據及這些基本報表中包含的相關信息的參考均已追溯調整，以反映所有呈現期間的拆股並股的影響。此外，因拆股並股而產生的任何碎股都已向上調整爲最接近的整股。此外，期權和Warrants的可發行股份數量及行使價格在這些基本報表中也已追溯調整，以反映2024年的拆股並股。
| 9 |
下表提供了選定的分享信息， 以追溯方式反映截至2023年12月31日的拆股並股情況：
| 12月31日 | ||||
| 2023 | ||||
| 發行在外的普通股 - 2024年前拆分， 股票 | $ | |||
| 發行在外的普通股 - 2024年後拆分， 股票 | $ | |||
| 額外實收資本 - 2024年前拆分 | $ | |||
| 額外實收資本 - 2024年後拆分 | $ | |||
截至年度 12月31日 | ||||
| 2023 | ||||
| 加權平均流通股數，基本和稀釋 - 2024年拆股前 | ||||
| 加權平均流通股數，基本和稀釋 - 2024年拆股後 | ||||
| 歸屬於普通股股東的基本和稀釋每股淨虧損 - 2024年拆股前 | $ | ) | ||
| 歸屬於普通股股東的基本和稀釋每股淨虧損 - 2024年拆股後 | $ | ) | ||
納斯達克 $1.00 最低買盤價格通知
2024年4月8日，我們收到了納斯達克證券市場上市資格部門的書面通知（「買盤價格通知」），指出公司未能滿足納斯達克上市規則5550(a)(2)中規定的1.00美元最低買盤價格要求，導致無法繼續在納斯達克資本市場上市（「買盤要求」）。
買盤價格公告並未導致公司普通股立即從納斯達克資本市場除牌。
納斯達克上市規則要求上市證券維持每股最低買盤價格爲1.00美元，並且根據截至2024年4月5日的30個連續業務日的公司普通股收盤買盤價格，公司不再滿足此要求。
通知指出，公司將被給予180個日歷天（或直到2024年10月7日）以恢復合規。我們在180個日歷天的初始期限於2024年10月7日到期之前，並未恢復與規則5550(a)(2)的合規性。2024年10月8日，我們收到了納斯達克工作人員（「工作人員」）的書面通知，告知我們的證券將面臨從納斯達克資本市場退市。我們於2024年10月10日在納斯達克聽證小組（「聽證小組」）前進行了上訴聽證，以對抗工作人員的退市通知。在上訴程序等待期間，我們的普通股交易將被暫時暫停。我們的普通股將繼續在納斯達克交易，直到聽證程序結束並且聽證小組發佈書面決定。聽證小組已向公司延長了時間，直到2025年1月31日，以展示與買盤價格要求的合規性。
在公司於2024年9月23日召開的特別股東大會上，公司股東批准了一項提案，授予我們的董事會酌情權，(i) 修改我們的公司章程，把我們普通股的流通股合併爲較少數量的流通股，即進行「反向股票拆分」，比例爲
| 10 |
納斯達克股東權益通知
2024年8月22日，公司收到納斯達克的通知，指出公司未能遵守股東權益至少達到2,500,000美元的要求（「股東權益要求」）。在截至2024年6月30日的季度報告10-Q中，公司報告的股東權益爲1,642,177美元，因此未滿足上市規則5550(b)(1)。
因此，工作人員決定將我們的 普通股在納斯達克退市。納斯達克的信函給予公司直到2024年8月29日的時間來請求對此決定的上訴。 公司請求在小組前進行聽證，以對工作人員的退市通知提出上訴。聽證請求在聽證程序結束之前，和小組在聽證後給予的任何額外延長期滿之前，暫停任何暫停或退市行動。
我們在2024年10月10日進行了上訴聽證會，向小組提出了對工作人員的除牌通知的上訴。小組允許公司延長至2025年1月31日，以證明符合股東權益要求。在上訴程序等待期間，公司的普通股交易暫停將被暫緩。我們的普通股將在納斯達克繼續交易，直到聽證程序結束並且小組發出最終書面決定。
公司打算採取所有合理措施 來恢復符合納斯達克上市規則的要求，並保持在納斯達克上市。公司目前正在評估可用的 期權，以解決該缺陷並恢復符合納斯達克最低股東權益要求。
註釋 2. 重要會計政策概要
估計的使用
按照美國公認會計原則編制基本報表需要管理層做出估計和假設，這些估計和假設會影響基本報表日期的資產和負債報告金額及或有資產和負債的披露，以及報告期間的收入和費用報告金額。實際結果可能與這些估計有所不同。
基本報表包括一些基於管理層最佳估計和判斷的金額。最重要的估計涉及折舊、攤銷，以及對Warrants、Warrants和衍生負債及購買公司普通股的期權的估值。這些估計可能會隨着更多當前信息的出現而進行調整，任何調整可能會是顯著的。
衍生工具的估值
財務會計準則委員會（「FASB」） 會計標準編纂（「ASC」）815-40， 衍生品和對沖：關於實體自身股權的合同， 涉及股權相關合同是否符合實體基本報表中的股權資格。一般來說，如果實體沒有足夠的授權和未發行股票來結算合同，這些協議會被視爲負債，並在每個報告期按公允價值進行記賬。公司評估其金融工具以判斷這些工具是負債，還是包含符合嵌入式衍生品特徵的特點。對於作爲負債進行會計處理的金融工具，衍生工具最初按其公允價值記錄，並在每個報告日重新評估，公允價值的變化作爲費用或收益計入收入。
| 11 |
金融工具的公允價值
ASC 820，公允價值計量，提供了公允價值計量的發展和披露指南。在這一會計指引下，公允價值被定義爲一個退出價格， 表示在計量日期，市場參與者之間有序交易中，出售資產所獲得的金額或轉移負債所支付的金額。因此，公允價值是一種市場基礎的計量，應該基於市場參與者在定價資產或負債時所使用的假設來確定。
會計指導將公允價值計量分類爲以下三類之一，以便於披露：
一級 - 未調整的報價 在測量日期，公司可以訪問的活躍市場中相同工具的價格。
二級 - 市場上未活躍的報價 或直接或間接可觀察的輸入。
第三級 - 對於該工具的不可觀察輸入 需要公司來制定假設。
公司根據財務會計標準委員會（"FASB"）的會計標準對具有負債和股權特徵的所有金融工具進行分析。根據該標準，金融資產和負債的分類完全基於對公允價值計量具有重大意義的最低輸入水平。
公司的金融工具的賬面價值，包括現金等價物、受限現金、應收賬款和應付賬款，因其相對短期性質，約等於其各自的公允價值。公司的認股權證負債和衍生負債是使用第3級輸入進行估算的（見註釋3）。
衍生金融工具
公司擁有衍生金融工具，這些工具不進行套期保值，也不符合套期會計的要求。這些工具的公允價值變動在合併營業報表中作爲其他收入（費用）以淨額形式記錄。
Cash and Cash Equivalents
The Company considers all highly liquid instruments
purchased with an original maturity of three months or less to be cash equivalents. The Company had
Accounts Receivable, Less Allowance for Doubtful Accounts
The Company estimates an allowance for doubtful accounts
based upon an evaluation of the current status of receivables, historical experience, and other factors as necessary. It is reasonably
possible that the Company’s estimate of the allowance for doubtful accounts will change. The allowance for doubtful accounts was
$
| 12 |
Revenue Recognition
Revenues are recognized when a contract with a customer exists, and at that point in time when we have delivered a Nociscan report to our customer. Revenue is recognized in the amount that reflects the negotiated consideration expected to be received in exchange for those reports. Following the delivery of the report, the company has no ongoing obligations or services to provide to the customer. Customers pay no other upfront, licensing, or other fees. To date, our reports are not reimbursable under any third-party payment arrangements, The Company invoices its customers based on the billing schedules in its sales arrangements. Payment terms range generally from 30 to 90 days from the date of invoice.
Liquidity, Capital Resources and Going Concern
The Company believes that the net proceeds from the common shares offered at-the-market in August 2024 and the issuance of C-Series preferred stock in September 2024 will be sufficient to fund current operating plans into December 2024. The Company has based these estimates, however, on assumptions that may prove to be wrong, and could spend available financial resources much faster than we currently expect. The Company will need to raise additional funds to continue funding our technology development. Management plans to secure such additional funding.
As a result of the Company’s recurring losses from operations and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.
Share-Based Compensation
The Company accounts for stock-based awards in accordance with provisions of ASC Topic 718, Compensation—Stock Compensation, under which the Company recognizes the grant-date fair value of stock-based awards issued to employees and nonemployee board members as compensation expense on a straight-line basis over the vesting period of the award, while awards containing a performance condition are recognized as expense when the achievement of the performance criteria is achieved. The Company uses the Black-Scholes-Merton option pricing model to determine the grant-date fair value of stock options. The Company records expense for forfeitures in the periods they occur.
The exercise or strike price of each option is not less than 100% of the fair market value of the Common Stock subject to the option on the date the option is granted.
The Company issues restricted stock unit awards to non-employee consultants who are providing various services. The awards are valued at the market price on the date of the grant. The awards vest over the contract life and based on achievement of targeted performance milestones.
On occasion, the Company grants common stock to compensate vendors for services rendered.
Deferred Financing Costs
The Company capitalizes certain legal, accounting,
and other fees and costs that are directly attributable to in-process equity financings as deferred offering costs until such financings
are completed. Upon the completion of an equity financing, these costs are recorded as a reduction of additional paid-in capital of the
related offering. Approximately $
| 13 |
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period to comply with certain new or revised accounting standards that have different effective dates for public and private companies.
NOTE 3. FAIR VALUE MEASUREMENTS
In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants, certain embedded redemption features associated with the senior note to Aclarion, Inc. on a recurring basis to determine the fair value of the liability.
| Fair value measured as of September 30, 2024 | ||||||||||||||||
Fair value on 2024 | Quoted prices in active markets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||
| Warrant liability | $ | $ | $ | $ | ||||||||||||
| Derivative Liability | ||||||||||||||||
| Total Fair value | $ | $ | $ | $ | ||||||||||||
There were no transfers between Level 1, 2, and 3 during the nine months ended September 30, 2024.
The following table presents changes in Level 3 liabilities measures at fair value for the nine months ended September 30, 2024. Both observable and unobservable inputs were used to determine the fair value positions that the Company has classified within the Level 3 category.
Warrant Liability | Derivative Liability | Total | ||||||||||
| Balance – December 31, 2023 | $ | $ | $ | |||||||||
| Exchange and Payoff of Notes Payable | ( | ) | ( | ) | ||||||||
| Change in fair value | ( | ) | ( | ) | ( | ) | ||||||
| Balance – September 30, 2024 | $ | $ | $ | |||||||||
The fair value of the embedded derivative liabilities associated with the Senior Notes Payable was estimated using a probability weighted discounted cash flow model to measure the fair value. This involves significant Level 3 inputs and assumptions including an (i) estimated probability and timing of certain financing events and event of default, and (ii) the Company’s risk-adjusted discount rate.
The fair value of the warrants to purchase shares of common stock was estimated using a Monte Carlo simulation using the following assumptions.
|
As of Dec 31, 2023 |
As of Sept 30, 2024 |
|||||||
| Warrant Liability | Warrant Liability | |||||||
| Strike Price | $ | $ | ||||||
| Contractual term (years) | ||||||||
| Volatility (annual) | % | % | ||||||
| Risk-free rate | % | -% | ||||||
| Floor Financing price | $ | $ | ||||||
| 14 |
NOTE 4. RECENT ACCOUNTING PRONOUNCEMENTS
To date, there have been no recent accounting pronouncements not yet effective that have significance, or potential significance, to our Consolidated Financial Statements.
NOTE 5. REVENUE
Contract Balances
The timing of revenue recognition, billings, and cash collections may result in trade, unbilled receivables, and deferred revenues on the balance sheets. At times, revenue recognition may occur before the billing, resulting in an unbilled receivable, which would represent a contract asset. The contract asset would be a component of accounts receivable and other assets for the current and non-current portions, respectively. In the event the Company receives advances or deposits from customers before revenue is recognized, this would result in a contract liability.
NOTE 6. SUPPLEMENTAL FINANCIAL INFORMATION
Balance Sheets
Prepaids and other current assets:
|
September 30, 2024 |
December 31, 2023 |
|||||||
| Short term deposits | $ | $ | ||||||
| Deferred offering costs | ||||||||
| Prepaid insurance D&O | ||||||||
| Prepaid insurance, other | ||||||||
| Prepaid clinical costs | ||||||||
| Prepaid exchange fees | ||||||||
| Prepaid other | ||||||||
| Other receivables | ||||||||
| $ | $ | |||||||
Accounts payable
|
September 30, 2024 |
December 31, 2023 |
|||||||
| Accounts payable | $ | $ | ||||||
| Credit cards payable | ( |
) | ||||||
| $ | $ | |||||||
Accrued and other liabilities:
|
September 30, 2024 |
December 31, 2023 |
|||||||
| Accrued payroll | $ | $ | ||||||
| Accrued bonus | ||||||||
| D&O financing | ||||||||
| Accrued audit and legal expenses | ||||||||
| Accrued interest | ||||||||
| Accrued board compensation | ||||||||
| Other accrued liabilities | ||||||||
| $ | $ | |||||||
| 15 |
NOTE 7. LEASES
The Company had
NOTE 8. INTANGIBLE ASSETS
The Company’s intangible assets are as follows:
|
September 30, 2024 |
December 31, 2023 |
|||||||
| Patents and licenses | $ | $ | ||||||
| Other | ||||||||
| Less: accumulated amortization | ( |
) | ( |
) | ||||
| Intangible assets, net | $ | $ | ||||||
Patents and licenses costs are accounted for as intangible assets and amortized over the life of the patent or license agreement and charged to research and development.
Amortization expense related to purchased intangible
assets was $
Patents and trademarks are reviewed at least annually for impairment. No impairment was recorded through September 30, 2024, and December 31, 2023, respectively.
Future amortization of intangible assets is as follows:
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 and beyond | ||||
| Total | $ |
NOTE 9. SHORT TERM NOTES AND CONVERTIBLE DEBT
Convertible Notes:
As of December 31, 2023, there were
| 16 |
Senior Notes Payable
In May 2023, the Company issued $
In September 2023, as agreed to during the
issuance of the May 2023 Notes, the Company exercised their right to an additional financing, issuing $
In November 2023, the Company issued $
The Company incurred issuance costs, recorded as deferred
financing costs, of $
The Company evaluated the embedded redemption
and contingent interest features in Senior Notes to determine if such features were required to be bifurcated as an embedded
derivative liability. In accordance with ASC 815-40, Derivatives and Hedging Activities, the embedded redemption features and
contingent interest feature were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value
at each reporting date. The Company fair valued such derivative liabilities and recorded a debt discount at issuance of the Senior
Notes of $
The Company issued warrants to purchase 77,010 and 46,556 shares of common stock (1,232,156 and 744,890 shares before giving effect to the 2024 Stock Split) to the holders of the May 2023 Notes and November 2023 Notes (collectively the “Senior Notes Warrants”) with an exercise price of $10.02 and $4.58 per share ($0.6262 and $0.2856 pre-2024 split), respectively. The Company accounted for the warrants in accordance with the guidance contained in ASC 815 “Derivatives and Hedging” whereby under that provision these warrants did not meet the criteria for equity treatment and were recorded as a liability. As such, these warrants are recorded at fair value as of each reporting date with the change in fair value reported within other income in the accompanying consolidated statements of operations as “Change in fair value of warrant liability” until the warrants are exercised, expired or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity. The fair value of the Senior Notes Warrants at issuance was $736,249 and was recorded as a debt discount. The Company incurred issuance costs of $72,862 relating to the Senior Notes Warrants which was recorded as a day 1 expense due to the liability classification of such warrants.
In connection with the issuance of the May 2023 Notes and November 2023 Notes, the Company paid a commitment fee in the form of 21,210 and 9,311 shares (339,360 and 148,978 shares before giving effect to the 2024 Stock Split) of unregistered common stock to the holders, respectively. The aggregate commitment fees had a fair value at issuance of $208,916 and were recorded as a deferred financing cost.
The resulting debt discounts from the derivative liabilities,
warrant liabilities and deferred financing costs were presented as a direct deduction from the carrying amount of that debt liability
and amortized to interest expense using the effective interest rate method. For the three months ended September 30, 2024, the Company
recognized $
Between January 22 and January 29, 2024, the
Company entered into a series of exchange agreements (the “Exchange Agreements”) with the accredited investors to
exchange principal and accrued interest on the May 2023 Notes for shares of common stock. Pursuant to the Exchange Agreements, the
Company issued an aggregate of
post-split shares of common stock in exchange for $
| 17 |
On March 6, 2024, the Company paid $
On August 14, 2024, the Company entered into an
exchange agreement (the “Exchange Agreement”) with the accredited investors to exchange $
The following table reconciles the aggregate amount for the Senior Notes as well as the unamortized deferred financing costs and debt discounts relating to the derivative liabilities and warrant liabilities.
September 30, 2024 | December 31, 2023 | |||||||
| Note Payable | $ | $ | ||||||
| Less: Unamortized Discounts and Deferred Financing Costs | ||||||||
| Warrants | ( | ) | ||||||
| Derivative | ( | ) | ||||||
| Deferred financing costs | ( | ) | ||||||
| ( | ) | |||||||
| $ | $ | |||||||
NOTE 10. COMMITMENTS AND CONTINGENCIES
Royalty Agreement
The Company has an exclusive license agreement
with the Regents of the University of California to make, use, sell and otherwise distribute products under certain of the Regents of
the University of California’s patents anywhere in the world. The Company is obligated to pay a minimum annual royalty of $
Litigation
To date, the Company has not been involved in legal proceedings arising in the ordinary course of its business. If any legal proceeding occurs, the Company will record a provision for a loss when it believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated, although litigation is inherently unpredictable and is subject to significant uncertainties, some of which are beyond the Company’s control. Should any of these estimates and assumptions change or prove to have been incorrect, the Company could incur significant charges related to legal matters that could have a material impact on its results of operations, financial position and cash flows.
| 18 |
NOTE 11. STOCKHOLDERS’ EQUITY
The Company filed an Amended and Restated Certificate of Incorporation on April 21, 2022, as part of the Company’s initial public offering. The Company was authorized to issue two classes of stock to be designated, respectively, “common stock” and “preferred stock.” The total number of shares which the Company was authorized to issue was two hundred twenty million (220,000,000) shares. Two hundred million () shares were authorized to be common stock, having a par value per share of $. Twenty million () shares were authorized to be preferred stock, having a par value per share of $. As of September 30, 2024, the Company had common shares outstanding.
Reverse Stock Split
The Company held a special meeting of stockholders
on March 24, 2023. At the special meeting, our stockholders approved one proposal, which was to grant discretionary authority to our board
of directors to (i) amend our certificate of incorporation to combine outstanding shares of our common stock into a lesser number of outstanding
shares, or a “reverse stock split,” at a specific ratio within a range of
In January 2024, the Company's board subsequently approved the final reverse stock split ratio of one-for-sixteen (the “2024 Stock Split”), which resulted in a reduction in the number of outstanding shares of common stock, warrants, stock options and restricted share units and a proportionate increase in the value of each share or strike price of the warrants and stock options. The common stock began trading on a reverse split-adjusted basis on the NASDAQ on January 4, 2024.
Public Offering
On February 27, 2024, the Company completed a public
offering of units (“Units”) at a price of $ per Unit, for gross proceeds of approximately $
White Lion Equity Line Agreement
On October 9, 2023, the Company entered into an
equity line common stock purchase agreement (the “Equity Line Purchase Agreement”) and a related registration rights
agreement with White Lion Capital, LLC (“White Lion”). Pursuant to the Equity Line Purchase Agreement, the Company has
the right, but not the obligation to require White Lion to purchase, from time to time, up to $
Pursuant to the Equity Line Purchase Agreement,
the Company issued to White Lion newly issued common shares for proceeds of $
Series A Preferred Stock
In February 2023 the Company sold one (1) share of
the Company’s newly designated Series A preferred stock to Jeffrey Thramann, the Company’s Executive Chairman, for a purchase
price of $
| 19 |
Series B Preferred Stock
On August 14, 2024, the Company entered into an
exchange agreement (the “Exchange Agreement”) with accredited investors to exchange $
Cumulative preferred dividends capitalized as of September 30, 2024
are $
Series C Preferred Stock Financing
On September 30, 2024, the Company entered into a
securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing. The Company has received
$
The Preferred Stock key terms are summarized as follows:
| Preference Amounts | Issue Date | Total Face Value of Investment | Issue Purchase Price/Share | |||||||
| Series B Preferred Stock | $ | $ | ||||||||
| · | ranks senior to the Common Stock with respect to dividends and rights upon liquidation | |
| · | Stated value of $1,000 per preferred share | |
| · | 10% per annum dividend rate payable in cash or stock; Company has the option to cumulate or “capitalize” or dividends, in which case the accrued dividend amount shall be added to the stated value | |
| · | has a liquidation preference equal to the greater of (a) 125% of the applicable liquidation value and (b) the amount per share such holder would receive if such holder converted the preferred shares into common stock immediately prior to the date of such payment | |
| · | convertible into common stock at the option of the holder at an initial fixed conversion price of $0.234 per share of common stock, subject to exchange cap and beneficial ownership limitations | |
| · | conversion price is subject to certain price-based anti-dilution adjustments in the event that the Company issues or sells any shares of common stock for a consideration per share less than the conversion price then in effect | |
| · | at any time, the Company has the right to redeem all, but not less than all, of the preferred shares then outstanding in cash at a price equal to at a 25% premium to the greater of (i) the applicable redemption amount and (ii) the equity value of the shares of our common stock underlying the preferred shares included in the applicable redemption amount | |
| · | no voting rights except as otherwise required by law (or with respect to approval of certain actions) |
| Series C Preferred Stock | $ | $ |
| · | ranks senior to the common stock with respect to dividends and rights upon liquidation | |
| · | Stated value of $1,000 per preferred share | |
| · | 10% per annum dividend rate payable in cash or stock; Company has the option to cumulate or “capitalize” or dividends, in which case the accrued dividend amount shall be added to the stated value | |
| · | has a liquidation preference equal to the sum of (i) the Black Scholes value of the warrants issued in connection with the Series C Preferred Stock and (ii) the greater of (a) 125% of the applicable liquidation value and (b) the amount per share such holder would receive if such holder converted the preferred shares into common stock immediately prior to the date of such payment | |
| · | convertible into common stock at the option of the holder at an initial fixed conversion price of $0.1759 per share of common stock, subject to exchange cap and beneficial ownership limitations | |
| · | conversion price is subject to certain price-based anti-dilution adjustments in the event that the Company issues or sells any shares of common stock for a consideration per share less than the conversion price then in effect | |
| · | at any time, the Company has the right to redeem all, but not less than all, of the preferred shares then outstanding in cash at a price equal to at a 25% premium to the greater of (i) the applicable redemption amount and (ii) the equity value of the shares of our common stock underlying the preferred shares included in the applicable redemption amount | |
| · | no voting rights except as otherwise required by law (or with respect to approval of certain actions) | |
| · | In connection with the Series C Preferred Stock, the Company also issued warrants exercisable for 5,685,049 shares of common stock with a 5.5 year term and an initial exercise price of $0.1759 per share |
| 20 |
Warrants
The following table summarizes the Company’s outstanding warrants as of September 30, 2024. The warrants and related strike prices have been adjusted to reflect the 2024 Stock Split.
| Issue Date |
Strike Price |
Number Outstanding |
Expiration | |||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| (1) | |
| (2) |
Basic and diluted net loss per share is computed by dividing net loss attributable to stockholders by the weighted average number shares of common stock outstanding during the period and shares issuable for vested restricted stock units. Potentially dilutive outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share for loss periods presented because including them would have been antidilutive.
A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share attributable to stockholders follows:
| Three Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Numerator: | ||||||||
| Net (loss) allocable to common stockholders used to compute basic and diluted loss per common share | $ | ( |
) | $ | ( |
) | ||
| Denominator: | ||||||||
| Weighted average shares outstanding used to compute basic and dilutive loss per share | ||||||||
| Weighted average shares issuable for vested restricted stock units and pre-funded warrants | ||||||||
| $ | $ | |||||||
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Numerator: | ||||||||
| Net (loss) allocable to common stockholders used to compute basic and diluted loss per common share | $ | ( |
) | $ | ( |
) | ||
| Denominator: | ||||||||
| Weighted average shares outstanding used to compute basic and dilutive loss per share | ||||||||
| Weighted average shares issuable for vested restricted stock units and pre-funded warrants | ||||||||
| $ | $ | |||||||
| 21 |
The following outstanding potentially dilutive securities were excluded from the weighted average calculation of dilutive loss per share attributable to common stockholders because their impact would have been antidilutive for the period presented:
|
September 30, 2024 |
September 30, 2023 |
|||||||
| Preferred stock (as-converted) | ||||||||
| Warrants | ||||||||
| Restricted stock units | ||||||||
| Stock options | ||||||||
2022 Aclarion Equity Incentive Plan
On April 21, 2022, in connection with the IPO, the Company’s 2022 Aclarion Equity Incentive Plan, or “2022 Plan”, went into effect. Our board of directors has appointed the compensation committee of our board of directors as the committee under the 2022 Plan with the authority to administer the 2022 Plan. The aggregate number of our shares of common stock that may be issued or used for reference purposes under the 2022 Plan is shares (2,000,000 prior to the 2024 Stock Split), with an automatic increase on January 1st of each year, for a period of not more than ten years, commencing on January 1st of the year following the year in which the initial public offering date (April 2022) occurs and ending on (and including) January 1, 2032, in an amount equal to 5% of the total number of shares of Capital Stock outstanding on December 31st of the preceding calendar year. Notwithstanding the foregoing, the Board may act prior to January 1st of a given year to provide that there will be no January 1st increase in shares for such year or that the increase in shares for such year will be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.
As of the year ended December 31, 2023, the aggregate number of our shares of common stock that may be issued or used for reference purposes under the 2022 Plan was (2,470,814 pre-split). On January 1, 2024, the 2022 Plan had an automatic increase of 41,270 (660,311 pre-split) shares which was 5% of the total number of shares of Capital Stock outstanding on December 31, 2023.
Options granted under the 2022 Plan may be incentive stock options or non-statutory stock options, as determined by the administrator at the time of grant of an option. Restricted stock may also be granted under the 2022 Plan. The options vest in accordance with the grant terms and are exercisable for a period of up to 10 years from grant date.
options were granted in the nine months ended September 30, 2024.
Nocimed, Inc. 2015 Stock Plan
The Company maintains the Nocimed, Inc. 2015 Stock Plan, or the “Existing Plan”, under which the Company could grant 152,558 shares (after giving effect to the 2024 Stock Split) or options of the Company to our employees, consultants, and other service providers. The Company suspended the Existing Plan in connection with the April 2022, initial public offering. The Company did not grant any stock options under the Existing Plan for the twelve months ended December 31, 2022, and thereafter. No further awards will be granted under the Existing Plan, but awards granted prior to the suspension date will continue in accordance with their terms and the terms of the Existing Plan.
| 22 |
Determining Fair Value of Stock Options
The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.
Valuation and Amortization Method —The Company estimates the fair value of its stock options using the Black-Scholes-Merton option-pricing model. This fair value is then amortized over the requisite service periods of the awards.
Expected Term—The Company estimates the expected term of stock option by taking the average of the vesting term and the contractual term of the option, as illustrated by the simplified method.
Expected Volatility—The expected volatility is derived from the Company’s expectations of future market volatility over the expected term of the options.
Risk-Free Interest Rate—The risk-free interest rate is based on the 10-year U.S. Treasury yield curve on the date of grant.
Dividend Yield—The dividend yield assumption is based on the Company’s history and expectation of no dividend payouts.
Stock Award Activity
A summary of option activity under the Company’s incentive plans is as follows:
|
Options Outstanding |
Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (In Years) | ||||||||||
| Balance at December 31, 2023 | $ | |||||||||||
| Options granted | – | |||||||||||
| Options exercised | – | |||||||||||
| Options forfeited/expired | – | |||||||||||
| Balance at September 30, 2024 | $ | |||||||||||
| Exercisable at December 31, 2023 | $ | |||||||||||
| Exercisable at September 30, 2024 | $ | |||||||||||
The aggregate intrinsic value of options outstanding at September 30, 2024 is $. The aggregate intrinsic value of vested and exercisable options at September 30, 2024 is $.
As of September 30, 2024, there was approximately $ of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over the next months.
| 23 |
Restricted Stock Units
In the nine months ended September 30, 2024, the Company had new grants of RSUs under the 2022 Plan.
Post-split RSU activity under the 2022 Plan was as follows for the nine months ended September 30, 2024:
|
RSU’s Outstanding |
Weighted-Average Grant-Date Fair value per Unit | |||||||
| Nonvested as of December 31, 2023 | $ | |||||||
| Granted | ||||||||
| Vested | ( |
) | ||||||
| Forfeited | ( |
) | ||||||
| Nonvested as of September 30, 2024 | $ | |||||||
The grant date fair value for a RSU is the market price of the common stock on the date of grant. The total share-based compensation expense related to RSUs recognized during the nine months ended September 30, 2024, was $.
As of September 30, 2024, there was approximately $ total unrecognized compensation cost related to non-vested RSUs.
As of September 30, 2024, the Company has obligation to issue shares of common stock associated with vested Restricted Stock Units.
Stock-based Compensation Expense
The following table summarizes the total stock-based compensation expense included in the Company’s statements of operations for the periods presented:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Sales and marketing | $ | $ | $ | $ | ||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total share based compensation | $ | $ | $ | $ | ||||||||||||
NOTE 14. SUBSEQUENT EVENTS
None.
| 24 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report and our audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 28, 2024. This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report. You should carefully read the “Risk Factors” section of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 2023, which was as filed with the SEC on March 28, 2024, to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”
Overview
Corporate Information
The Company currently operates as a Delaware corporation, under the name Aclarion, Inc.
Results of operations
For the Three Months Ended September 30, 2024, and 2023:
The following table summarizes our results of operations for the three months ended September 30, 2024, and 2023.
Three Months Ended September 30, | ||||||||||||
| 2024 | 2023 | $ Change | ||||||||||
| Revenue | ||||||||||||
| Revenue | $ | 14,407 | $ | 19,065 | $ | (4,658 | ) | |||||
| Cost of revenue | 21,332 | 19,558 | 1,774 | |||||||||
| Gross profit (loss) | (6,925 | ) | (493 | ) | (6,432 | ) | ||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 232,775 | 192,896 | 39,879 | |||||||||
| Research and development | 195,797 | 198,252 | (2,455 | ) | ||||||||
| General and administrative | 860,461 | 770,534 | 89,927 | |||||||||
| Total operating expenses | 1,289,033 | 1,161,682 | 127,351 | |||||||||
| (Loss) from operations | (1,295,958 | ) | (1,162,175 | ) | (133,783 | ) | ||||||
| Other income (expense): | ||||||||||||
| Interest expense | (71,527 | ) | (166,332 | ) | 94,805 | |||||||
| Loss on exchange of debt | (6,585 | ) | – | (6,585 | ) | |||||||
| Loss on extinguishment of debt | – | – | – | |||||||||
| Changes in fair value of warrant and derivative liabilities | 7,591 | 330,252 | (322,661 | ) | ||||||||
| Other, net | 303 | 245 | 58 | |||||||||
| Total other (expense) | (70,218 | ) | 164,165 | (234,383 | ) | |||||||
| (Loss) before income taxes | (1,366,176 | ) | (998,010 | ) | (368,166 | ) | ||||||
| Income tax provision | – | – | – | |||||||||
| Net income (loss) | $ | (1,366,176 | ) | $ | (998,010 | ) | $ | (368,166 | ) | |||
| Dividends accrued for preferred stockholders | (12,142 | ) | – | (12,142 | ) | |||||||
| Net (loss) allocable to common stockholders | $ | (1,378,318 | ) | $ | (998,010 | ) | $ | (380,308 | ) | |||
| Net (loss) per share allocable to common stockholders | $ | (0.15 | ) | $ | (1.87 | ) | $ | 1.72 | ||||
| Weighted average shares of common stock outstanding, basic and diluted | 9,437,871 | 532,928 | 8,904,943 | |||||||||
| 25 |
Total revenues. Total revenues for the quarter ended September 30, 2024 were $14,407, which was a decrease of $4,658, or 24%, from $19,065 for the quarter ended September 30, 2023. The decrease in revenues was driven primarily by the conclusion of certain clinical activity at customer sites utilizing NOCISCAN ® reports, offset in part by an increase in patient-pay reports.
Cost of Revenue. Direct cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, partner fees (Radnet), and credit card fees. Total cost of revenue was $21,332 for the quarter ended September 30, 2024, compared to $19,558 for the quarter ended September 30, 2023, an increase of 9%. This increase was primarily due to a change in revenue mix that increased partner fees.
Sales and Marketing. Marketing expenses include post-market clinical and reimbursement consulting, salaries, website support, press releases, conferences, travel, and shared-based compensation for Key Opinion Leaders. Sales and marketing expenses were $232,775 for the quarter ended September 30, 2024, compared to $192,896 for the quarter ended September 30, 2023, an increase of $39,879, or 21%. Post-market clinical expenses increased as the Company focused on the initiation of the Clarity trial. Marketing expenses also increased with the number of press releases year-over-year. There was a partial favorable offset as shared-based compensation decreased in the third quarter of 2024 with the conclusion of Key Opinion Leader grant periods.
Research and Development. Research and development expenses were $195,797 for the quarter ended September 30, 2024, compared to $198,252 for the quarter ended September 30, 2023, a decrease of $2,455, or 1%.
General and Administrative. General and administrative expenses were $860,461 for the quarter ended September 30, 2024, an increase of $89,927, or 12%, from $770,534 for the quarter ended September 30, 2023. For the quarter ended September 30, 2024, there was increased investment in investor relations and consulting, offset in part by reduced bonus expense, D&O insurance premiums, and legal fees compared to the quarter ended September 30, 2023.
Other Income (Expense).
Interest expense was $71,527 for the quarter ended September 30, 2024, a decrease of $94,805 from the $166,332 incurred during the quarter ended September 30, 2023. This decrease in interest expense was due to the ongoing retirement of debt over the nine month period ended September 30, 2024.
The Company’s warrant and derivative liabilities are recorded at fair value as of each reporting date (see Note 3 to the condensed financial statements). For the quarter ended September 30, 2024, the Company recorded a favorable adjustment in fair value of $7,591.
| 26 |
For the Nine Months Ended September 30, 2024, and 2023:
The following table summarizes our results of operations for the nine months ended September 30, 2024, and 2023.
|
Nine Months Ended September 30, |
|||||||||
| 2024 | 2023 | $ Change | |||||||
| Revenue | |||||||||
| Revenue | $ | 35,492 | $ | 61,607 | $ | (26,115) | |||
| Cost of revenue | 64,102 | 56,312 | 7,790 | ||||||
| Gross profit (loss) | (28,610) | 5,295 | (33,905) | ||||||
| Operating expenses: | |||||||||
| Sales and marketing | 638,869 | 577,969 | 60,900 | ||||||
| Research and development | 636,940 | 652,657 | (15,717) | ||||||
| General and administrative | 2,402,408 | 2,524,308 | (121,900) | ||||||
| Total operating expenses | 3,678,217 | 3,754,934 | (76,717) | ||||||
| (Loss) from operations | (3,706,827) | (3,749,640) | 42,812 | ||||||
| Other income (expense): | |||||||||
| Interest expense | (535,199) | (214,850) | (320,349) | ||||||
| Loss on exchange of debt | (1,073,317) | – | (1,073,317) | ||||||
| Loss on extinguishment of debt | (111,928) | – | (111,928) | ||||||
| Changes in fair value of warrant and derivative liabilities | 330,632 | 318,452 | 12,180 | ||||||
| Other, net | 93,284 | 11 | 93,273 | ||||||
| Total other (expense) | (1,296,528) | 103,613 | (1,400,141) | ||||||
| (Loss) before income taxes | (5,003,355) | (3,646,027) | (1,357,328 | ||||||
| Income tax provision | – | – | – | ||||||
| Net income (loss) | $ | (5,003,355) | $ | (3,646,027) | $ | (1,357,328) | |||
| Dividends accrued for preferred stockholders | (12,142) | – | (12,142) | ||||||
| Net (loss) allocable to common stockholders | $ | (5,015,497) | $ | (3,646,027) | $ | (1,369,470) | |||
| Net (loss) per share allocable to common stockholders | $ | (0.65) | $ | (7.07) | $ | 6.42 | |||
| Weighted average shares of common stock outstanding, basic and diluted | 7,699,173 | 515,975 | 7,183,198 | ||||||
Total revenues. Total revenues for the nine months ended September 30, 2024 were $35,492, which was a decrease of $26,115, or 42%, from $61,607 for the nine months ended September 30, 2023. The decrease in revenues was driven primarily by the conclusion of certain clinical activity at customer sites utilizing NOCISCAN ® reports.
Cost of Revenue. Direct cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, partner fees (Radnet), and credit card fees. Total cost of revenue was $64,102 for the nine months ended September 30, 2024, compared to $56,312 for the nine months ended September 30, 2023, an increase of 14%, driven by a price increase related to hosting costs and a change in revenue mix that increased partner fees.
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Sales and Marketing. Marketing expenses include post-market clinical and reimbursement consulting, salaries, website support, press releases, conferences, travel, and shared-based compensation for Key Opinion Leaders. Sales and marketing expenses were $638,869 for the nine months ended September 30, 2024, compared to $577,969 for the nine months ended September 30, 2023, an increase of $60,900, or 11%. Increased post-market clinical expense related to the Clarity trial, greater marketing expense, and increased benefits costs were offset in part by a reduction in restricted stock vesting expense related to the Company’s engagement of Key Opinion Leaders.
Research and Development. Research and development expenses were $636,940 for the nine months ended September 30, 2024, compared to $652,657 for the nine months ended September 30, 2023, a decrease of $15,717, or 2%.
General and Administrative. General and administrative expenses were $2,402,408 for the nine months ended September 30, 2024, a decrease of $121,900 or 5%, from $2,524,308 for the nine months ended September 30, 2023. The decrease was driven by reduced bonus accruals, lower personnel expense, and decreased D&O insurance premiums, offset in part by higher legal and finance support costs and increased investment in investor relations.
Other Income (Expense).
Interest expense was $535,199 for the nine months ended September 30, 2024, an increase of $320,349 from the $214,850 incurred during the nine months ended September 30, 2023. This increase in interest expense was due to the increase in debt taken on by the Company in 2023. In May, September and November 2023 the Company issued $2,594,118 aggregate principal amount of unsecured non-convertible notes to certain accredited investors. (see Note 9 to the condensed financial statements).
The Company incurred losses for the nine months ended September 30, 2024, on three transactions to reduce debt. The first transaction took place between January 22 and January 29, 2024, whereby the Company entered into a series of exchange agreements with investors to issue an aggregate of 644,142 post-split shares of common stock in exchange for $1,519,779 principal and accrued interest on the notes. This transaction accelerated the recognition of the related note discounts and resulted in a $1,066,732 charge. The second transaction was on March 6, 2024, whereby the Company paid $300,974 of principal and accrued interest on the notes. This transaction accelerated the recognition of the related note discounts and resulted in a $111,928 charge. The third transaction was on August 14, 2024, whereby the Company entered into an exchange agreement with investors to issue an aggregate of 930 shares of B-Series convertible preferred stock in exchange for $930,052 principal and accrued interest on the notes.
The Company’s warrant and derivative liabilities are recorded at fair value as of each reporting date (see Note 3 to the condensed financial statements). For the nine months ended September 30, 2024, the Company recorded a favorable adjustment in fair value of $330,632.
Other net income of $93,284 for the nine months ended September 30, 2024, included a favorable discount to accounts payable of $117,985, offset in part by a $25,000 penalty paid to investors related to a failure to timely register certain commitment shares.
Critical accounting policies and use of estimates
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.
While our significant accounting policies are described in more detail in the notes to our financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
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Revenue Recognition
The Company derives its revenues from one source, the delivery of Nociscan reports to medical professionals. Revenues are recognized when a contract with a customer exists, and the control of the promised services are transferred to our customers. The amount of revenue recognized reflects the consideration the Company expects to receive in exchange for those services. Our revenues are generated from contracts with customers in the United States and internationally.
Equity-Based Compensation
Certain of our employees and consultants have received grants of common stock options and RSUs in our company. These awards are accounted for in accordance with guidance prescribed for accounting for equity-based compensation. Based on this guidance and the terms of the awards, the awards are equity classified.
Until our April 2022 initial public offering, we were a private company with no active public market for our common equity. Therefore, we had periodically determined the overall value of our company and the estimated per share fair value of our common equity at their various dates using contemporaneous valuations performed in accordance with the guidance outlined in the American Institute of CPA’s Practice Aid. Since a public trading market for our common stock has been established in connection with the completion of our initial public offering, it will no longer be necessary for us to estimate the fair value of our common stock in connection with our accounting for equity awards we may grant, as the fair value of our common stock will be its public market trading price.
For financial reporting purposes, we performed common stock valuations as a private company with the assistance of a third-party specialist. Subsequent to the initial public offering, the fair value of the Company’s common stock underlying its equity awards is based on the quoted market price of the Company’s common stock on the grant date.
Going Concern
The Company believes that the net proceeds from the common shares offered at-the-market in August 2024 and the issuance of C-Series preferred stock in September 2024 will be sufficient to fund current operating plans into December 2024. The Company has based these estimates, however, on assumptions that may prove to be wrong, and could spend available financial resources much faster than we currently expect. The Company will need to raise additional funds to continue funding our technology development. Management plans to secure such additional funding.
As a result of the Company’s recurring losses from operations and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.
Liquidity and capital resources
Sources of liquidity
To date, the Company has financed operations primarily through public and private offerings of our debt and equity securities and PPP loans that were forgiven.
During the nine months ended September 30, 2024, the Company completed a public offering of 5,175,000 units (“Units”) at a price of $0.58 per Unit, for gross proceeds of approximately $3.0 million, before deducting offering expenses. Additionally, the Company raised approximately $1.4M of net proceeds from an equity line in January 2024 and $0.3M in April 2024, retired approximately $930K of debt in exchange for 930 shares of B-Series preferred stock in August 2024, issued common stock pursuant to our Reg A+ offering of $529K, and issued 1,000 shares of C-Series preferred stock in September 2024 for proceeds of $1.0M.
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As of September 30, 2024, the Company had cash, including $10,000 of restricted cash, of $1,322,098. The Company believes that this cash will be sufficient to fund current operating plans into December 2024. The Company has based these estimates, however, on assumptions that may prove to be wrong, and could spend available financial resources much faster than we currently expect. The Company will need to raise additional funds to continue funding our technology development. Management plans to secure such additional funding.
Cash flows
The following table summarizes our sources and uses of cash for each of the periods presented:
Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash used in operating activities | $ | (4,348,748 | ) | $ | (2,913,165 | ) | ||
| Cash used in investing activities | (261,220 | ) | (85,603 | ) | ||||
| Cash provided by financing activities | 4,900,996 | 1,687,412 | ||||||
| Net increase (decrease) in cash | $ | 291,028 | $ | (1,311,356 | ) | |||
Operating activities
During the nine months ended September 30, 2024, operating activities used $4,348,748 of cash. The Company significantly reduced accounts payable, primarily legal expenses that had accrued over time, and significantly reduced accrued expenses including payroll, bonuses, board compensation, and audit fees. During the nine months ended September 30, 2023, operating activities used $2,913,165 of cash. This use of cash consisted primarily of employee compensation and benefit expense, general liability insurance, contractor compensation, and audit and legal fees.
Investing activities
During the nine months ended September 30, 2024, and 2023, investing activities used $261,220 and $85,603 of cash, respectively. These investing activities consisted almost entirely of patent and license maintenance.
Financing activities
Between January 4 and January 8, 2024, and pursuant to the Equity Line Purchase Agreement, the Company issued to White Lion 452,343 newly issued common shares for proceeds of $1,449,532. On April 26, 2024, the Company issued 1,050,000 common shares for proceeds of $304,500.
Between January 22 and January 29, 2024, the Company entered into a series of exchange agreements (the “Exchange Agreements”) with the accredited investors to exchange principal and accrued interest on the May 2023 Notes for shares of common stock. Pursuant to the Exchange Agreements, the Company issued an aggregate of 644,142 post-split shares of common stock in exchange for $1,519,779 principal and accrued interest on the May 2023 Notes.
On February 27, 2024, the Company completed a public offering of 5,175,000 units (“Units”) at a price of $0.58 per Unit, for gross proceeds of approximately $3.0 million, before deducting offering expenses. Each Unit was comprised of (i) one share of common stock or, in lieu of common stock, one prefunded warrant to purchase a share of common stock, and (ii) two common warrants, each common warrant to purchase a share of common stock. The prefunded warrants are immediately exercisable at a price of $0.00001 per share of common stock and only expire when such prefunded warrants are fully exercised. The common warrants are immediately exercisable at a price of $0.58 per share of common stock and will expire five years from the date of issuance.
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On March 6, 2024, the Company paid $300,973 of principal and accrued interest on the November 2023 Notes.
Between August 12 and August 27, 2024, the Company issued 1,825,000 shares of common stock pursuant to our Reg A+ offering for proceeds of $529K.
On August 14, 2024, the Company entered into an exchange agreement (the “Exchange Agreement”) with the accredited investors to exchange $930,052 of principal and accrued interest on the September 2023 Notes for 930 shares of newly issued Series B convertible preferred stock (“Series B Preferred Stock”) at a purchase price of $1,000 per share.
On September 30, 2024, the Company entered into a securities purchase agreement with accredited investors for a convertible preferred stock and warrants financing. The Company has received $1,000,000 of gross proceeds in connection with the closing of this financing. The Company issued 1,000 shares of Series C convertible preferred stock (“Series C Preferred Stock”) at a purchase price of $1,000 per share of Series C Preferred Stock. The Series C Preferred Stock is convertible into Common Stock at an initial conversion price (“Conversion Price”) of $0.1759 per share of Common Stock. The Company also issued warrants exercisable for 5,685,049 shares of Common Stock with a 5.5 year term and an initial exercise price of $0.1759 per share.
During the nine months ended September 30, 2023, the Company sold one (1) share of the Company’s newly designated Series A preferred stock to Jeffrey Thramann, the Company’s Executive Chairman, for a purchase price of $1,000. The share of Series A preferred stock had proportional voting rights that were limited to the proposal to approve a reverse stock split of the Company’s common stock. Following the March 24, 2023, special meeting, the Company redeemed the one outstanding share of Series A preferred stock on March 28, 2023, in accordance with its terms. The redemption price was $1,000. No Series A preferred stock remains outstanding.
During the nine months ended September 30, 2023, the Company issued $1,437,500 May 2023 Notes, with a maturity date of May 16, 2024, for cash proceeds of $1,250,000. The May 2023 Notes contained an original issue discount of 15.0% and accrued interest at an annual rate of 8.0%.
In September 2023, as agreed to during the issuance of the May 2023 Notes, the Company exercised their right to an additional financing, issuing $862,500 September 2023 Notes that mature on September 1, 2024, for cash proceeds of $750,000. The September 2023 Notes contained an original issue discount of 15.0% and accrued interest at an annual rate of 8.0%.
Funding requirements
Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and the Company may never generate meaningful revenues. Accordingly, we may need to obtain substantial additional funds to achieve our business objectives.
Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that the Company raises additional capital through the sale of equity securities, the ownership interest of existing stockholders may be diluted. Any debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute existing stockholders’ ownership interests.
If we raise additional funds through licensing agreements and strategic collaborations with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds, we may be required to delay, limit, reduce and/or terminate development of our product candidates or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
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Contractual obligations and commitments
The Company does not have any contractual obligations not otherwise on our balance sheet as of September 30, 2024.
Off-balance sheet arrangements
The Company did not have, during the periods presented, and we do not currently have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.
Recently issued accounting pronouncements
The Company reviewed all recently issued standards and has determined that, as disclosed in Note 4 to our condensed financial statements appearing in this quarterly report, there have been no recent accounting pronouncements not yet effective that have significance, or potential significance, to our Consolidated Financial Statements.
Emerging growth company and smaller reporting company status
The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of this extended transition period and, as a result, we will not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for public entities. Accordingly, our financial statements may not be comparable to other public companies that do not elect the extended transition period.
We are also a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
We have adopted and maintain disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e) under the Exchange Act), that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), to allow for timely decisions regarding required disclosure.
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As required by Exchange Act Rule 13a-15, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to our limited resources our disclosure controls and procedures are not effective in providing material information required to be included in our periodic SEC filings on a timely basis and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure about our internal control over financial reporting discussed below.
During the nine months ended September 30, 2024, the Company worked with an outside firm to establish best practices to improve our required disclosure about our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
Our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective as of December 31, 2023, due to material weaknesses related to (1) a limited segregation of duties due to our lack of formal control documentation, limited resources, and the small number of employees, and (2) a lack of adequate accounting resources to properly account for complex accounting transactions. Management determined that these control deficiencies constitute material weaknesses, which could result in material misstatements of significant accounts and disclosures that could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected. In addition, due to limited staffing, we are not always able to detect minor errors or omissions in reporting.
The Company did engage an outside firm in the third quarter of 2023 to provide accounting support and increased segregation of duties. During the nine months ended September 30, 2024, the Company continued to work with the outside firm to establish best practices over time that enhance internal control over financial reporting.
Other than the applicable remediation efforts described above, there were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company may be involved in litigation relating to claims arising out of our operations in the normal course of business. We are not currently a party to any material legal proceedings, the adverse outcome of which, in our management’s opinion, individually or in the aggregate, could have a material adverse effect on the results of our operations or financial position. There are no material proceedings in which any of our directors, officers or affiliates or any registered or beneficial stockholder of more than 5% of our common stock is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors.
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors disclosed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 28, 2024. There have been no material changes to our risk factors from those included in such Annual Report except as noted below. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the quarter ended September 30, 2024, no director
or officer of the Company
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Item 6. Exhibits.
The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Quarterly Report are listed in the Exhibit Index below. The exhibits listed in the Exhibit Index are incorporated by reference herein.
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| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
___________________________
| # | Indicates management contract or compensatory plan. |
| ** | Certain portions of the exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| ACLARION, INC. | |||
| By: | /s/ John Lorbiecki | ||
| John Lorbiecki | |||
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|||
| Date: November 14, 2024 | |||
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