FEED 10-K & 10-Q changes, risk factors and insider trading

Risks Related to the Combined Company Following the Merger with Predecessor ENvue

Risks Related to the Combined Company Following the Merger with Predecessor ENvue

As a result of the foregoing, NanoVibronix may be unable to realize the full strategic and financial benefits currently anticipated from the Merger, and NanoVibronix cannot assure you that the Merger will be accretive to NanoVibronix in the near term or at all. Furthermore, if NanoVibronix fails to realize the intended benefits of the Merger, the market price of NanoVibronix’s common stock could decline to the extent that the market price reflects those benefits. NanoVibronix’s stockholders will have experienced substantial dilution of their ownership interests in NanoVibronix without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent NanoVibronix is able to realize only part of the strategic and financial benefits currently anticipated from the Merger.

NanoVibronix may become involved in securities litigation or stockholder derivative litigation in connection with the Merger, and this could divert the attention of NanoVibronix management and harm the combined company’s business, and insurance coverage may not be sufficient to cover all related costs and damages.

Securities litigation or stockholder derivative litigation frequently follows the announcement of certain significant business transactions, such as the sale of a business division or announcement of a business combination transaction. In the future, NanoVibronix may become involved in this type of litigation in connection with the Merger. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect the business of NanoVibronix.

NanoVibronix stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection with the Merger.

If NanoVibronix is unable to realize the full strategic and financial benefits currently anticipated from the Merger, NanoVibronix stockholders will have experienced substantial dilution of their ownership interests in the company without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent NanoVibronix is able to realize only part of the strategic and financial benefits currently anticipated from the Merger. Furthermore, if we fail to realize the intended benefits of the Merger, the market price of NanoVibronix common stock could decline to the extent that the market price reflects those benefits.

If the Merger does not qualify as a “reorganization” under Section 368(a) of the Code, U.S. holders of ENvue may be required to pay additional U.S. federal income taxes.

For U.S. federal income tax purposes, the Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

If the Merger does not qualify as a “reorganization” within the meaning of Section 368(a) of the Code, a U.S. holder of ENvue common stock generally would recognize gain or loss for U.S. federal income tax purposes on each share of ENvue common stock surrendered in the Merger in an amount equal to the difference between the fair market value, at the time of the Merger, of the NanoVibronix common stock received in the Merger and such holder’s adjusted tax basis in the ENvue common stock surrendered in the Merger. Gain or loss must be calculated separately for each block of ENvue common stock exchanged by such U.S. holder if such blocks were acquired at different times or for different prices. Any gain or loss recognized generally would be capital gain or loss, and generally would be long-term capital gain or loss if the U.S. holder’s holding period in a particular block of ENvue common stock is more than one year at the effective time of the Merger. Long-term capital gain of certain non-corporate taxpayers, including individuals, generally is taxed at reduced U.S. federal income tax rates. The deductibility of capital losses is subject to limitations. A U.S. holder’s tax basis in shares of NanoVibronix common stock received in the Merger would be equal to the fair market value thereof as of the effective time of the Merger, and such U.S. holder’s holding period in such shares would begin on the day following the closing of the Merger.

The market price of NanoVibronix’s common stock after the Merger may be subject to significant fluctuations and volatility, and the stockholders of the company may be unable to resell their shares at a profit and may incur losses.

Changes in the business operations, strategies and focus of the combined company following the Merger may not result in an improvement in the value of NanoVibronix common stock.

It is currently anticipated that, following the Merger, NanoVibronix would focus some of its resources on executing ENvue’s current business plan. Consequently, an investment in NanoVibronix’s common stock partially represents an investment in the business operations, strategies and focus of ENvue. ENvue’s failure to successfully market the ENvue System, as well as its other products, will significantly diminish the anticipated benefits of the Merger and have a material adverse effect on the business of NanoVibronix. There is no assurance that NanoVibronix’s business operations, strategies or focus will be successful following the Merger, and the Merger could depress the value of the NanoVibronix’s common stock.

The concentration of the capital stock ownership with insiders of NanoVibronix after the Merger will likely limit the ability of the stockholders of NanoVibronix to influence corporate matters.

Following the Merger, the executive officers, directors, five percent or greater stockholders, and the respective affiliated entities of NanoVibronix, in the aggregate, beneficially own approximately 65% of NanoVibronix’s outstanding common stock. As a result, these stockholders, acting together, have control over matters that require approval by NanoVibronix’s stockholders, including the election of directors and approval of significant corporate transactions. Corporate actions might be taken even if other stockholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a corporate transaction that other stockholders may view as beneficial.

Pursuant to the terms of the Merger Agreement, we are required to obtain stockholder approval for conversion of all outstanding shares of our Series X Preferred Stock into shares of our common stock. We cannot guarantee that our stockholders will approve this matter.

Under the terms of the Merger Agreement, we agreed to take all action necessary under applicable law to obtain the requisite approval for the conversion of all outstanding shares of Series X Preferred Stock issued in the Merger into shares of our common stock, as required by the Nasdaq Listing Rules, at a stockholders meeting to be held as soon as practicable following the execution of the Merger Agreement, which would be time consuming and costly. Additionally, if we breach any of our obligations and covenants set forth in the Series X Certificate of Designation, then we shall, at the request of the requisite Series X Preferred Stock holders (the “Settlement Request”), pay, out of funds legally available therefor, and prior to any payment in satisfaction of any redemption rights of any other class or series of capital stock, an amount in cash equal to the stated value of the shares of Series X Preferred Stock held by each holder, with such payment to be made within two (2) Business Days from the date of Settlement Request, and upon payment in full of the stated value for such shares of Series X Preferred Stock, such shares shall be redeemed, retired and no longer be outstanding. Such Settlement Request could therefore materially affect our results of operations.

Risks Related to NanoVibronix’s Business

We have a history of losses, and we expect to continue to incur losses and may not achieve or maintain profitability.

For the fiscal year ended December 31, 2024, and 2023, we had a net loss of approximately $3.7 million and $3.7 million, respectively, with revenues of approximately $2.5 million and $2.3 million, respectively. As of December 31, 2024, and 2023, we had an accumulated deficit of approximately $70.0 million and $66.1 million, respectively. We expect to incur losses for at least the next year, as we continue to incur expenses related to seeking U.S. Food and Drug Administration (“FDA”) approval for UroShield, and market acceptance of PainShield, which will require costly additional clinical trials and research, further product development and professional fees associated with regulatory compliance. Even if we succeed in commercializing our new products, we may not be able to generate sufficient revenues to cover our expenses and achieve profitability or be able to maintain profitability.

The Company’s financial statements have been prepared on a going concern basis, and do not include adjustments that might be necessary if the Company is unable to continue as a going concern. Management has substantial doubt about the Company’s ability to continue as a going concern.

The Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the year ended December 31, 2024, the Company’s cash used in operations was $2.5 million leaving a cash balance of $752,000 as of December 31, 2024. Because the Company does not have sufficient resources to fund our operations for the next twelve months from the date of this filing, management has substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company has incurred additional short-term debt related to the merger transaction. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company will need to raise additional capital to finance its losses, debt obligations, and negative cash flows from operations and may continue to be dependent on additional capital raising as long as our products do not reach commercial profitability. There are no assurances that the Company would be able to raise additional capital on terms favorable to it. If the Company is unsuccessful in commercializing its products and raising capital, it will need to reduce activities, curtail, or cease operations.

Increasing inflation could adversely affect our business, financial condition, results of operations or cash flows.

Inflation, as well as some of the measures taken by or that may be taken by the governments in countries where we operate in an attempt to curb inflation may have negative effects on the economies of those countries generally. If the United States or other countries where we operate experience substantial inflation in the future, our business may be adversely affected. This could have a material adverse effect on our business, financial condition, results of operations, or cash flows. Specifically, our existing distributor agreements limit the amount that we can increase the price that we sell our products to the distributors. Accordingly, an inflationary environment, including factors such as increasing freight and materials prices, could make it less profitable for us to do business.

If we fail to retain our key management, or to attract and keep additional key personnel, we may be unable to successfully execute our business plan.

Our failure to protect our intellectual property rights could diminish the value of our solutions, weaken our competitive position and reduce our revenue.

We regard the protection of our intellectual property, which includes patents and patent applications, trade secrets, trademarks and domain names, as critical to our success. We strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions. We enter into confidentiality and invention assignment agreements with our employees, consultants and contractors, and confidentiality agreements with parties with whom we conduct business in order to limit access to, and disclosure and use of, our proprietary information. However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation of our proprietary information or deter independent development of similar technologies by others.

We have patents, as well as pending patent applications, in both the United States and relevant foreign jurisdictions. There can be no assurance that our patent applications will be approved, that any patents issued will adequately protect our intellectual property, or that these patents will not be challenged by third parties or found to be invalid or unenforceable or that our patents would prevent a competitor from designing around our claims in our patents. We have also obtained trademark registration in the United States and in foreign jurisdictions. Effective trade secret, trademark and patent protection is expensive to develop and maintain, both in terms of initial and ongoing registration requirements and the costs of defending our rights. We may be required to protect our intellectual property in an increasing number of jurisdictions, a process that is expensive and may not be successful or which we may not pursue in every location. We may, over time, increase our investment in protecting our intellectual property through additional patent filings that could be expensive and time-consuming.

We have granted US issued patents, as well as issued patents in Europe and China and a number of corresponding foreign patents in other relevant jurisdictions, covering UROSHIELD devices and have expiration dates ranging from May of 2023 to July of 2030. We also have pending patent applications related to UROSHIELD devices, which would have expected expiration dates, if granted, ranging from December of 2041 to March of 2044.

Granted patents related to PAINSHIELD, PAINSHIELD PLUS, WOUNDSHIELD have expiration dates of August of 2033 in the United States, and February of 2027 in Europe, China and Israel. We also have pending patent applications related to PAINSHIELD, PAINSHIELD PLUS, WOUNDSHIELD devices, which would have expected expiration dates, if granted, ranging from September of 2040 to December of 2041.

Monitoring unauthorized use of our intellectual property is difficult and costly. Our efforts to protect our proprietary rights may not be adequate to prevent misappropriation of our intellectual property. We may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights. Further, our competitors may independently develop technologies that are similar to ours but which avoid the scope of our intellectual property rights. Further, the laws in the United States and elsewhere change rapidly, and any future changes could adversely affect us and our intellectual property. Our failure to meaningfully protect our intellectual property could result in competitors offering solutions that incorporate our most technologically advanced features, which could seriously reduce demand for our products. In addition, we may in the future need to initiate infringement claims or litigation. Litigation, whether as a plaintiff or a defendant, can be expensive, time-consuming and may divert the efforts of our technical staff and managerial personnel, which could harm our business, whether or not the litigation results in a determination that is unfavorable to us. In addition, litigation is inherently uncertain, and thus we may not be able to stop our competitors from infringing our intellectual property rights.

We could incur substantial costs and disruption to our business as a result of any dispute related to, or claim of infringement of another party’s intellectual property rights, which could harm our business and operating results.

In recent years, there has been significant litigation in the United States over patents and other intellectual property rights. From time to time, we may face allegations that we or customers who use our products have infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including allegations made by our competitors or by non-practicing entities, or that we or our customers have misappropriated the intellectual property rights of such third parties. We cannot predict whether assertions of third party intellectual property rights or claims arising from these assertions will substantially harm our business and operating results. If we are forced to defend any infringement or misappropriation claims or attacks on the validity of our intellectual property rights, whether they are with or without merit or are ultimately determined in our favor, we may face costly litigation and diversion of technical and management personnel. Most of our competitors have substantially greater resources than we do and are able to sustain the cost of complex intellectual property litigation to a greater extent and for longer periods of time than we could. Furthermore, an adverse outcome of a dispute may require us, among other things: to pay damages, potentially including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s patent or other intellectual property rights; to cease making, licensing or using products that are alleged to incorporate or make use of the intellectual property of others; to expend additional development resources to redesign our products; and to enter into potentially unfavorable royalty or license agreements in order to obtain the rights to use necessary technologies. Royalty or licensing agreements, if required, may be unavailable on terms acceptable to us, or at all. In any event, we may need to license intellectual property which would require us to pay royalties or make one-time payments. Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, the time and resources necessary to resolve them could harm our business, operating results, financial condition and reputation.

We are a medical device company focusing on non-invasive biological response-activating devices that target wound healing and pain therapy and can be administered at home, without the assistance of medical professionals. Our WoundShield, PainShield and UroShield products are backed by novel technology which relates to ultrasound delivery through surface acoustic waves.

Reverse Stock Splits

On February 8, 2023, we effected a reverse stock split of our common stock at a ratio of 1-for-20 (the “2023 Reverse Stock Split”, and on February 13, 2025, we effected a reverse stock split of our common stock at a ratio of 1-for11 (the “2025 Reverse Stock Split” and together with the 2023 Reverse Stock Split, the Reverse Stock Splits”) pursuant a Certificate of Amendment to our Amended and Restated Certificate of Incorporation. At the effective time of the 2023 Reverse Stock Split and the 2025 Reverse Stock Split, every 20 and 11 shares, respectively, of our issued and outstanding common stock were converted automatically into one issued and outstanding share of common stock without any change in the par value per share. Any fractional share of a stockholder resulting from the Reverse Stock Splits was rounded up to the nearest whole number of shares. Proportional adjustments were made to the number of shares of our common stock issuable upon exercise or conversion of the Company’s equity awards, warrants and other convertible securities, as well as the applicable exercise or conversion price thereof. Except as otherwise indicated, all share and per-share figures in this Annual Report on Form 10-K have been adjusted to reflect the Reverse Stock Splits.

Recent Developments

2025 Reverse Stock Split

On March 13, 2025, at 4:05 p.m., Eastern Time, pursuant to a Certificate of Amendment to our Amended and Restated Certificate of Incorporation, as amended, 2025 Reverse Stock Split became effective. Our common stock began trading on Nasdaq on a split-adjusted basis on March 14, 2025. See “Reverse Stock Splits” above.

The Merger Agreement

After giving effect to the Merger, pursuant to the terms and conditions of the Merger Agreement: (i) the holders of the outstanding equity of Predecessor ENvue immediately prior to the effective time of the First Merger (“First Effective Time”) own 19.9% of the common stock of the Company and 85.0% of the outstanding equity of the Company (assuming the Series X Preferred Stock is converting at a ratio of 1,000:1) immediately following the First Effective Time, which following stockholder approval will allow the Series X Preferred Stock to convert to common stock of the Company which may result in the holders of Predecessor ENvue to own 85% of the common stock of the Company, and (ii) the holders of our outstanding equity immediately prior to the First Effective Time own 80.1% of the common stock of the Company and 15.0% of the outstanding equity of the Company (assuming the Series X Preferred Stock is converting at a ratio of 1,000:1) immediately following the First Effective Time, which following stockholder approval which will allow the Series X Preferred Stock to convert to common stock of the Company which may result in our holders owning 15% of common stock of the Company.

Debenture Financing and Senior Convertible Debenture

On February 13, 2025, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which we sold in a private placement, a senior convertible debenture (the “Debenture”) due the earlier of (i) the date that is the 30-day anniversary of the effective date of stockholder approval (the “Debenture Stockholder Approval”) of the issuance of the shares of common stock upon the conversion of the debenture (the “Debenture Financing”) and (ii) the date that is nine months following the date of issuance of the Debenture (“Maturity Date”), having an aggregate principal amount of $500,000. The closing of the Debenture Financing occurred on February 14, 2025.

On March 26, 2025 we amended and restated the Debenture to increase the Principal Amount to $1,300,000 to provide for the funding by Alpha Capital Anstalt (the “Investor”) to our subsidiary ENvue Medical Holdings, Corp. (“ENvue”), a wholly owned subsidiary of the Company of (i) an aggregate of $250,000 by the Investor to ENvue on February 6, 2025, (ii) an aggregate of $250,000 by the Investor to ENvue on March 4, 2025, and (iii) and an aggregate of $300,000 by the Investor to ENvue on March 26, 2025.

On the Maturity Date, we shall pay the Investor in cash or, at the option of the Investor, in the form of conversion shares, or a combination thereof, the entire outstanding principal amount of the Debenture, together with accrued and unpaid interest thereon, the applicable exit fee and any other amounts due thereunder. Following the receipt of Debenture Stockholder Approval, the Debenture shall be convertible, in whole or in part, into shares of common stock, at the option of the Investor, at the initial conversion price of $4.8906 (the “Conversion Price”), which is subject to customary anti-dilution adjustments, and which such Conversion Price shall not be lower than the floor price of $0.97812. The Debenture bears interest at the rate of 8.0% per annum, payable on the Maturity Date.

On February 13, 2025, as amended on March 26, 2025, in connection with the Purchase Agreement and issuance of the Debenture, we entered into that certain Registration Rights Agreement (the “Registration Rights Agreement”) with the Investor. Pursuant to the Registration Rights Agreement, the Company is required to prepare and file a resale registration statement with the SEC within 30 calendar days following the closing date of the amended Debenture Financing (the “Filing Deadline”). The Company shall use its commercially reasonable efforts to cause such registration statement to be declared effective by the SEC within 60 calendar days of the Filing Deadline (or within 90 calendar days if the SEC reviews the resale registration statement).

January 2025 3(a)(9) Exchange

On January 7, 2025, we entered into a securities exchange agreement (the “Exchange Agreement”) with a certain institutional investor pursuant to which we agreed to issue an aggregate of (i) 41,498 shares of common stock (the “3(a)(9) Shares”), (ii) a warrant to purchase up to 158,562 shares of common stock (the “January 2025 Warrant”), and (iii) a pre-funded warrant to purchase up to 178,132 shares of common stock (the “January 2025 Pre-Funded Warrant”), in exchange for the A-1 Warrant held by the Holder to purchase up to 264,271 shares of common stock at an exercise price of $16,17 per share (the “Exchange”). We cancelled the A-1 Warrant reacquired in the Exchange and the A-1 Warrant will not be reissued. The January 2025 Warrant has substantially the same terms as the A-1 Warrant, except that the shares of common stock issuable upon exercise of the January 2025 Warrant are subject to stockholder approval pursuant to the applicable rules and regulations of the Nasdaq, is exercisable for a term of five and one half years from the date such stockholder approval is received and deemed effective under Delaware law, and has an exercise price of $6.8296 per share.

Subsequent to the Exchange, the holder of the January 2025 Pre-Funded Warrant exercised the January 2025 Pre-Funded Warrant in full on a cashless basis in full for an aggregate of 228,354 shares of common stock.

The issuance in the Exchange of the 3(a)(9) Shares, the January 2025 Warrant, the January 2025 Pre-Funded Warrant and the shares of common stock issuable upon the exercise thereof pursuant to the Exchange Agreement was made in reliance on an exemption from registration under Section 3(a)(9) of the Securities Act

Our operations in Israel

Because we are incorporated under the laws of the state of Israel and our operations are conducted in Israel, our business and operations are directly affected by economic, political, geopolitical, and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.

Most recently, in October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. Moreover, the clash between Israel and Hezbollah in Lebanon, may escalate in the future into a greater regional conflict, especially in the northern part of Israel where our Israel office is located which stores approximately $1.8 million worth of our inventory.

Any hostilities involving Israel, or the interruption or curtailment of trade within Israel or between Israel and its trading partners, or the ability to ship our products overseas, could adversely affect our operations and results of operations and could make it more difficult for us to raise capital. Parties with whom we may do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary. The conflict situation in Israel could cause situations where medical product certifying or auditing bodies could not be able to visit manufacturing facilities of our subcontractors in Israel in order to review our certifications or clearances, thus possibly leading to temporary suspensions or even cancellations of our product clearances or certifications. The conflict situation in Israel could also result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.

There have been travel advisories imposed as related to travel to Israel, and restriction on travel, or delays and disruptions as related to imports and exports may be imposed in the future. An inability to receive supplies and materials, shortages of materials or difficulties in procuring our materials, among others, or conversely, our ability to ship products to our US facilities or overseas customers, may adversely impact our ability to commercialize and manufacture our product candidates and products in a timely manner. This could cause a number of delays and/or issues for our operations, including delay of the review of our product candidates by regulatory agencies, which in turn would have a material adverse impact on our ability to commercialize our product candidates.

Additionally, members of our management and employees are located and reside in Israel. Shelter-in-place and work-from-home measures, government-imposed restrictions on movement and travel and other precautions taken to address the ongoing conflict may temporarily disrupt our management and employees’ ability to effectively perform their daily tasks.

The IDF, the national military of Israel, is a conscripted military service, subject to certain exceptions. None of our employees are subject to military service in the IDF and have been called to serve, but many do serve on guard duty in their local communities from time to time. It is possible that there will be further military reserve duty call-ups in the future, which may affect our business due to a shortage of skilled labor and loss of institutional knowledge, and necessary mitigation measures we may take to respond to a decrease in labor availability, such as overtime and third-party outsourcing, for example, which may have unintended negative effects and adversely impact our results of operations, liquidity or cash flows.

It is currently not possible to predict the duration or severity of the ongoing conflict or its effects on our business, operations and financial conditions. The ongoing conflict is rapidly evolving and developing, and could disrupt our business and operations, interrupt our sources and availability of supply and hamper our ability to raise additional funds or sell our securities, among others.

Protrade Proceeding

On February 26, 2021, Protrade Systems, Inc. (“Protrade”) filed a Request for Arbitration (the “Request”) with the International Court of Arbitration (the “ICA”) of the International Chamber of Commerce alleging the Company is in breach of an Exclusive Distribution Agreement dated March 7, 2019 (the “Agreement”) between Protrade and the Company. Protrade alleges, in part, that the Company has breached the Agreement by discontinuing the manufacture of the DV0057 Painshield MD device in favor of an updated 10-100-001 Painshield MD device. Protrade claims damages estimated at $3 million. The Company vigorously defended the claims asserted by Protrade.

On March 15, 2022, the arbitrator issued a final award, which, determined that (i) the Company had the right to terminate the Exclusive Distribution Agreement; (ii) the Company did not breach the duty of good faith and fair dealing with regard to the Exclusive Distribution Agreement; and (iii) the Company did not breach any confidentiality obligations to Protrade. Nevertheless, the arbitrator determined that the Company did not comply with the obligation to supply Protrade with a year’s supply of patches, and awarded Protrade $1,500,250, which consists of $1,432,000 for “lost profits” and $68,250 as reimbursement of arbitration costs, on the grounds that the Company allegedly failed to supply Protrade with certain patches utilized by users of DV0057 Painshield MD device. The arbitrator based the decision on the testimony of Protrade’s president who asserted that a user would use in excess of 33 patches per each device. The Company believes that the number of patches per device alleged by Protrade is grossly inflated, and that these claims were not properly raised before the arbitrator. Accordingly, on April 13, 2022, the Company submitted an application for the correction of the award which the arbitrator denied on June 22, 2022.

On July 22, 2022, the Company filed a cross-motion seeking to vacate arbitration award on the grounds that the arbitrator exceeded her authority, that the award was procured by fraud, and that the arbitrator failed to follow procedures established by New York law. In particular, the Company averred in its motion that Protrade’s witness made false statements in arbitration, and that the arbitrator resolved a claim that was never raised by Protrade and that has no factual basis.

On October 3, 2022, the court issued a decision granting Protrade its petition to confirm the award and denying the cross-motion.

On November 9, 2022, the Company filed a motion to re-argue and renew its cross-motion to vacate the arbitration decision based on newer information that was not available during the initial hearing. On the same day, the Company also filed a notice of appeal with the Appellate Division, Second Department. On March 21, 2023, the court denied the motion to re-argue and renew.

On July 10, 2023, the Company filed its appeal with the Appellate Division, Second Department. That appeal is now fully briefed. In February 2025, the Second Department informed counsel for the Company that the Second Department was beginning to process the appeal for calendaring.”

As of December 31, 2024, and 2023, the Company accrued the amount of the arbitration award to Protrade of approximately $2.1 and $2.0 million, respectively, including interest which is classified in “Other accounts payable and accrued expenses”.

Business Developments

Nasdaq Deficiency and Hearings Panel Decision

However, there can be no assurance that we will be able to maintain compliance. If we fail to satisfy another Nasdaq requirement for continued listing, Nasdaq staff could provide notice that our common stock will become subject to delisting. In such event, Nasdaq rules permit us to appeal the decision to reject its proposed compliance plan or any delisting determination to a Nasdaq Hearings Panel. Accordingly, there can be no guarantee that we will be able to maintain our Nasdaq listing.

Sequencing

The Company adopted a sequencing policy under ASC 815-40-35 whereby if reclassification of contracts from equity to liabilities is necessary pursuant to ASC 815 due to the Company’s inability to demonstrate it has sufficient authorized shares. This was due to the Company committing more shares than authorized. While temporary suspensions are in place to keep the potential exercises beneath the number authorized, certain instruments are classified as liabilities, after allocating available authorized shares on the basis of the most recent grant date of potentially dilutive instruments. Pursuant to ASC 815, issuances of securities granted as compensation in a share-based payment arrangement are not subject to the sequencing policy.

Revenues. For the three months ended March 31, 2026, and 2025, our revenues were approximately $653 and $1,025, respectively, a decrease of approximately 36%, or $372, between the periods. The decrease was primarily attributable to the removal of PainShield Ultra from the market, partially offset by revenues generated from the ENvue Systems, as well as continued revenues from sales through certain sales representatives and our largest direct medical equipment distributor. Revenues may fluctuate as new customers are added or when existing distributors or customers place large orders in one period and not in another, as experienced during the three months ended March 31, 2025.

Selling and Marketing Expenses. For the three months ended March 31, 2026, and 2025, selling and marketing expenses were approximately $772 and $349, respectively, an increase of approximately 121%, or $423 between the periods. The increase was primarily attributable to a full three months of ENvue operating expenses in the current period compared to only the period from February 14, 2025 (the date of the ENvue Merger) through March 31, 2025 in the prior year, including amortization expense related to intangible assets recognized in connection with the purchase price allocation, as well as higher consulting fees and travel costs associated with system reactivation, new installations, commercialization activities, and rebranding efforts for the ENvue Systems.

Selling and marketing expenses as a percentage of total revenues were approximately 118% and 34% for the three months ended March 31, 2026, and 2025, respectively.

General and administrative expenses as a percentage of total revenues were approximately 370% and 131% for the three months ended March 31, 2026, and 2025, respectively.

On March 24, 2026, the holder also exercised an additional $400 of the Additional Investment Right, resulting in the issuance of 400 new shares of Series H Preferred Stock at a stated value of $1,000 per share (not in thousand).

In aggregate, during the three months ended March 31, 2026, the holder exercised a total of $3,900 of the Additional Investment Right resulting in the issuance of 3,900 new shares of Series H Preferred Stock, which remained outstanding as of March 31, 2026.