# Aclarion, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Aclarion, Inc.](/companies/acon.md) (CIK 1635077)
- Form: 10-Q
- Filed: 2023-11-14
- Accepted by EDGAR: Nov 14, 2023, 11:15 ET
- Period: 2023-09-30
- Accession: 0001683168-23-008065
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1635077/000168316823008065/aclarion_i10q-093023.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1635077/000168316823008065/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $19.1k | us-gaap:Revenues |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $61.6k | us-gaap:Revenues |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $19.6k | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $56.3k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | −$493 | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $5.3k | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $198.3k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $652.7k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$1.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-01-01 to 2023-09-30 | −$3.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $166.3k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $214.8k | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$998.0k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$3.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.12 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.44 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.12 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$0.44 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 8,526,854 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 8,255,606 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | −$2.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2023-09-30 | $161.4k | us-gaap:Cash |
| Current assets | at 2023-09-30 | $364.9k | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $1.5m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $2.4m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2023-09-30 | −$828.0k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 21,510 characters.

*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/A for the year ended December 31, 2022, which was filed with the SEC on June 12, 2023. 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/A for the year ended December 31, 2022, which was as filed with the SEC on June 12, 2023, 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

We currently operate as a Delaware corporation, under the name Aclarion, Inc.

### Results of operations

### For the Three Months Ended September 30, 2023, and 2022:

The following table summarizes our results of operations for the three months ended September 30, 2023, and 2022.

| Revenue | Three Months Ended September 30, 2023 | 2022 | $ Change |
| --- | ---: | ---: | ---: |
| Revenue | $19,065 | $18,222 | $843 |
| Cost of revenue | 19,558 | 17,028 | 2,530 |
| Gross profit (loss) | (493) | 1,194 | (1,687) |
| **Operating expenses:** |  |  |  |
| Sales and marketing | 192,896 | 159,388 | 33,507 |
| Research and development | 198,252 | 290,966 | (92,714) |
| General and administrative | 770,534 | 1,184,100 | (413,565) |
| Total operating expenses | 1,161,682 | 1,634,454 | (472,772) |
| **Income (loss) from operations** | (1,162,175) | (1,633,260) | 471,085 |
| Other income (expense): |  |  |  |
| Interest expense | (166,332) | (2,070) | (164,262) |
| Changes in value of warrant and derivative liabilities | 330,252 | – | 330,252 |
| Other, net | 245 | 2,297 | (2,052) |
| Total other income (expense) | 164,165 | 227 | 163,938 |
| Income (loss) before income taxes | (998,010) | (1,633,033) | 635,023 |
| Income tax provision | – | – | – |
| **Net income (loss)** | $(998,010) | $(1,633,033) | $635,023 |
| Dividends accrued for preferred stockholders | $– | $– | $– |
| Net income (loss) allocable to common stockholders | $(998,010) | $(1,633,033) | $635,023 |
| Net income (loss) per share allocable to common shareholders | $(0.12) | $(0.20) | $0.08 |
| Weighted average shares of common stock outstanding, basic and diluted | 8,526,854 | 7,821,515 | 705,339 |

28

*Total revenues*. Total revenues for the quarter ended September 30, 2023 were $19,065, which was an increase of $843, or 5%, from $18,222 for the quarter ended September 30, 2022. The increase in revenues resulted from slightly stronger patient-pay invoicing.

*Cost of Revenue*. Direct cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, NuVasive commission of 6%, partner fees (Radnet), and credit card fees. Total cost of revenue was $19,558 for the quarter ended September 30, 2023, compared to $17,028 for the quarter ended September 30, 2022, an increase of 15%. This change is due to an increase in hosting and software costs.

*Sales and Marketing*. Sales and marketing expenses were $192,895 for the quarter ended September 30, 2023, compared to $159,388 for the quarter ended September 30, 2022, an increase of $33,507 or 21%. This increase was driven by Key Opinion Leader restricted stock unit vesting, conferences, and travel expenses, offset in part by higher salary expense for the quarter ended September 30, 2022, related to deferred salary payments to employees.

*Research and Development*. Research and development expenses were $198,252 for the quarter ended September 30, 2023, compared to $290,966 for the quarter ended September 30, 2022, a decrease of $92,714 or 32%. The decrease was driven by higher salary expense for the quarter ended September 30, 2022, related to deferred salary payments to employees and clinical and reimbursement consulting.

*General and Administrative*. General and administrative expenses were $770,534 for the quarter ended September 30, 2023, a decrease of $413,565 or 35%, from $1,184,099 for the quarter ended September 30, 2022. Higher expenses overall in the third quarter of 2022 were related to deferred salary payments to employees and share-based compensation true-ups. The third quarter 2023 included increased technical accounting and controller services offset in part by lower D&O insurance expense.

*Interest Expense*. Interest expense was $166,632 for the quarter ended September 30, 2023, an increase of $164,262, from the $2,070 for the quarter ended September 30, 2022. This increase relates to the two tranches of bridge funding issued in May and September of 2023 (see Note 10 to the financial statements).

### For the Nine Months Ended September 30, 2023, and 2022:

The following table summarizes our results of operations for the nine months ended September 30, 2023, and 2022.

| Revenue | Nine Months Ended September 30, 2023 | 2022 | $ Change |
| --- | ---: | ---: | ---: |
| Revenue | $61,607 | $37,924 | $23,683 |
| Cost of revenue | 56,312 | 48,009 | 8,303 |
| Gross profit (loss) | 5,295 | (10,085) | 15,380 |
| **Operating expenses:** |  |  |  |
| Sales and marketing | 577,969 | 353,456 | 224,515 |
| Research and development | 652,657 | 848,995 | (196,338) |
| General and administrative | 2,524,308 | 3,406,572 | (882,264) |
| Total operating expenses | 3,754,934 | 4,609,023 | (854,088) |
| **Income (loss) from operations** | (3,749,640) | (4,619,108) | 869,468 |
| Other income (expense): |  |  |  |
| Interest expense | (214,850) | (1,505,477) | 1,290,627 |
| Changes in value of warrant and derivative liabilities | 318,452 | – | 318,452 |
| Other, net | 11 | 602 | (591) |
| Total other income (expense) | 103,613 | (1,504,875) | 1,608,488 |
| Income (loss) before income taxes | (3,646,027) | (6,123,983) | 2,477,956 |
| Income tax provision | – | – | – |
| **Net income (loss)** | $(3,646,027) | $(6,123,983) | $2,477,956 |
| Dividends accrued for preferred stockholders | $– | $(415,523) | $415,523 |
| Net income (loss) allocable to common stockholders | $(3,646,027) | $(6,539,506) | $2,893,479 |
| Net income (loss) per share allocable to common shareholders | $(0.44) | $(1.17) | $0.73 |
| Weighted average shares of common stock outstanding, basic and diluted | 8,255,606 | 5,522,950 | 2,732,656 |

29

*Total revenues*. Total revenues for the nine months ended September 30, 2023 were $61,607, which was an increase of $23,683, or 62%, from $37,924 for the nine months ended September 30, 2022. The increase was related to higher scan volume at research institutions.

*Cost of Revenue*. Direct cost of revenue is comprised of hosting and software costs, field support, UCSF royalty cost, NuVasive commission of 6%, partner fees (Radnet), and credit card fees. Total cost of revenue was $56,312 for the nine months ended September 30, 2023, compared to $48,009 for the nine months ended September 30, 2022, an increase of 17%. This change is due to the increase in hosting and software costs.

*Sales and Marketing*. Sales and marketing expenses were $577,969 for the nine months ended September 30, 2023, compared to $353,456 for the nine months ended September 30, 2022, an increase of $224,514 or 64%. This increase was driven primarily by Key Opinion Leader restricted stock unit vesting, society conferences, and travel expenses.

*Research and Development*. Research and development expenses were $652,657 for the nine months ended September 30, 2023, compared to $848,995 for the nine months ended September 30, 2022, a decrease of $196,338. The decrease was primarily driven by a $123,828 payment to UCSF for the quarter ended September 30, 2022 related to a milestone license payment upon the April 2022 IPO, and higher salary expense for the quarter ended September 30, 2022, related to deferred salary payments to employees.

*General and Administrative*. General and administrative expenses were $2,524,308 for the nine months ended September 30, 2023, a decrease of $882,264 or 26%, from $3,406,572 for the nine months ended September 30, 2022.

The Company transitioned from private to public with its IPO in April 2022. For the nine months ended September 30, 2022, the Company incurred post-IPO expenses related to bonus payouts and stock compensation expenses, which were not incurred for the nine months ended September 30, 2023. This year-over-year decrease in 2023 was partially offset by increased audit, legal, and board fees for the nine months ended September 30, 2023 .

*Interest Expense*. Interest expense was $214,850 for the nine months ended September 30, 2023, a decrease of $1,290,626, from the $1,505,477 for the nine months ended September 30, 2022. The decrease in interest expense year-over-year was primarily driven by the $1.3 million beneficial conversion rate charged to interest expense for the conversion of all accrued interest on the Company's outstanding secured promissory notes into common shares and common stock warrants in connection with the effectiveness of the April 2022 IPO. Interest expense for the nine months ended September 30, 2023 is related to the unsecured debt issued in May and September (see Note 10 to the financial statements).

### 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.

### 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 we expect to receive in exchange for those services. Substantially all of our revenues are generated from contracts with customers in the United States.

### 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 IPO, 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 IPO, 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

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.

On May 16, 2023, the Company entered into a securities purchase agreement with accredited investors for an unsecured non-convertible note financing. The Company received $1,250,000 of gross proceeds, with out-of-pocket issuance costs of $203,575. On September 1, 2023, the Company closed the second tranche of this financing. The Company received an additional $750,000 of gross proceeds, with out-of-pocket issuance costs of $92,738.

As of September 30, 2023, we had cash, including $10,000 of restricted cash, of $171,450. Management is actively managing our cash position and working to secure longer-term funding in the fourth quarter of 2023.

### Liquidity and capital resources

### Sources of liquidity

To date, we have financed our operations primarily through private placements of preferred shares and debt financing, PPP loans that were forgiven, an equity line of credit, and our IPO on April 21, 2022.

Through September 30, 2023, we raised an aggregate of $31,145,148 of gross proceeds from $19,319,098 of preferred and common stock, $2,928,541 from the sale of convertible notes, $370,191 of PPP loans that were forgiven, and net proceeds of $8,527,318 from the IPO, after underwriter compensation and deductions. We also issued a $2,000,000 promissory note in June 2021 that was repaid in April 2022. On May 16, 2023, the Company entered into a securities purchase agreement with accredited investors for an unsecured non-convertible note financing. The Company received $1,250,000 of gross proceeds, with out-of-pocket issuance costs of $203,575. On September 1, 2023, the Company closed the second tranche of this financing. The Company received an additional $750,000 of gross proceeds, with out-of-pocket issuance costs of $92,738.

As of September 30, 2023, we had cash, including $10,000 of restricted cash, of $171,450. Management is actively managing our cash position and working to secure longer-term funding in the fourth quarter of 2023.

### Cash flows

The following table summarizes our sources and uses of cash for each of the periods presented:

*(unaudited)*

|  | Nine Months Ended September 30, 2023 | 2022 (restated) |
| --- | ---: | ---: |
| Cash used in operating activities | $(2,913,165) | $(3,814,059) |
| Cash used in investing activities | (85,603) | (159,622) |
| Cash provided by financing activities | 1,687,412 | 6,187,258 |
| Net (decrease) increase in cash | $(1,311,356) | $2,213,577 |

### Operating activities

During the nine months ended September 30, 2023, operating activities used $2,913,165 of cash compared to $3,814,059 for the nine months ended September 30, 2022. This use of cash consisted primarily of employee compensation and benefit expense, general liability insurance, contractor compensation, and audit and legal fees. The Company completed their IPO in April 2022. Related to the IPO, the Company paid bonuses, funded a new director and officer insurance policy, and made a $123,828 payment to UCSF related to a license agreement milestone.

### Investing activities

During the nine months ended September 30, 2023, and 2022, investing activities used $85,603 and $159,622 of cash, respectively. These investing activities consisted almost entirely of patent and license maintenance.

### Financing Activities

During the nine months ended September 30, 2023, net cash provided by financing activities was $1,687,412, which included $2,000,000 of proceeds related to the issuance of an unsecured promissory note, reduced by $312,588 of issuance costs. During the nine months ended September 30, 2022, net cash provided by financing activities was $6,187,258, which included the net of $8,552,318 (net of underwriter compensation and deductions but excluding $25,000 prepayment in 2021), of initial public offering proceeds, minus $365,060 of IPO-related cash issuance costs, and $2,000,000 repayment of promissory notes.

### Funding requirements

Developing medical technology products is a time-consuming, expensive and uncertain process that takes years to complete, and we 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 we raise 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.

### Other contractual obligations and commitments

Our current office lease and sublease expired on June 30, 2022. The Company does not have any contractual obligations not otherwise on our balance sheet as of September 30, 2023.

### Off-balance sheet arrangements

We 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

We have reviewed all recently issued standards and have determined that, other than as disclosed in Note 2 to our condensed financial statements appearing in this quarterly report, such standards will not have a material impact on our financial statements or do not otherwise apply to our operations.

### 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.

## Market risk

As filed, 153 characters.

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.

## Controls and procedures

As filed, 2,800 characters.

### 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.

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.

### 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 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 has 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. The Company intends to further leverage the outside firm to establish best practices over time that enhance internal control over financial reporting.

## Risk factors

As filed, 2,760 characters.

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, 2022, which was filed with the SEC on February 27, 2023, and an 10-K/A amendment filed June 12, 2023. 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.

*We are not currently in compliance with the certain continued listing requirements of the Nasdaq Capital Market and a delisting could limit the liquidity of our stock, increase its volatility and hinder our ability to raise capital.*

As disclosed above (See Note 1 – Risks and Uncertainties) we are currently not in compliance with certain continued listing requirements of the Nasdaq Capital Market. Nasdaq has afforded the Company compliance periods with respect to these issues and the Company is working to retain compliance with all continued listing rules. There can be no assurance that the Company will be able to maintain the listing of its common stock on Nasdaq.

If our common stock is delisted by Nasdaq, our common stock may be eligible for quotation on an over-the-counter quotation system or on the pink sheets. Upon any such delisting, our common stock would become subject to the regulations of the SEC relating to the market for penny stocks. A penny stock is any equity security not traded on a national securities exchange that has a market price of less than $5.00 per share. The regulations applicable to penny stocks may severely affect the market liquidity for our common stock and could limit the ability of shareholders to sell securities in the secondary market. In such a case, an investor may find it more difficult to dispose of or obtain accurate quotations as to the market value of our common stock, and there can be no assurance that our common stock will be eligible for trading or quotation on any alternative exchanges or markets.

Delisting from Nasdaq could adversely affect our ability to raise additional financing through public or private sales of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our common stock. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.

Filed Nov 14, 2023.
Source: SEC EDGAR, the filing index for accession 0001683168-23-008065. Last ingested by Listed: Nov 5, 2026, 18:57 ET. No prices; not investment advice.