As filed with the U.S. Securities and Exchange Commission on September 29, 2023

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The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

This is our initial public offering (the “Offering”). We are offering 2,300,000 shares of our common stock, par value $0.001 per share (“Common Stock”, and each a “Share” and collectively, the “Shares”). We expect the Offering price to be between $4.00 and $6.00 per Share. After the Offering, the market price for our Shares may be outside this range.

Prior to this Offering, there has been no public market for our Common Stock. We have applied to have our Common Stock listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “EMTX.” The closing of this Offering is contingent upon the successful listing of our Common Stock on Nasdaq. If our listing is not approved by Nasdaq, we will not be able to complete this initial public offering. Prior to effectiveness of the registration statement of which this prospectus forms a part, we expect to effect a reverse stock split of our issued and outstanding shares of common stock at a ratio of 1 for 2.5 (“Common Stock Reverse Split”). All common stock per share numbers and prices included herein have been adjusted to reflect this Common Stock Reverse Split, unless stated otherwise.

We are an “emerging growth company” under applicable U.S. Securities and Exchange Commission (“SEC”) rules and will be subject to reduced public company reporting requirements.

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 11 of this prospectus. You should carefully consider these risk factors, as well as the information contained in this prospectus, before purchasing any of the securities offered by this prospectus.

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

(1) We have agreed to reimburse the underwriters for certain expenses and the underwriters will receive compensation in addition to underwriting discounts and commissions. See “Underwriting” for additional disclosure regarding underwriters’ compensation and offering expenses.

We have granted a 30-day option to the representative of the underwriters to purchase up to an additional 345,000 Shares to cover over-allotments, if any.

For a description of the other compensation to be received by the underwriters, see “Underwriting” beginning on page 106.

The underwriters expect to deliver the securities in the offering on or about [●], 2023.

You should rely only on the information contained in this prospectus. Neither we nor the representative have authorized anyone to provide any information or to make any representations other than those contained in this prospectus we have prepared. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date. You should also read this prospectus together with the additional information described under “Where You Can Find More Information.”

This prospectus contains “forward-looking statements.” Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” and “continue” or the negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees of future performance. While we believe these assumptions and expectations to be reasonable and made in good faith, assumed facts or bases almost always vary from the actual results, and the differences between assumed facts or expectations and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, our management expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and is believed to have a reasonable basis. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. You are cautioned to not place undue reliance on these forward-looking statements, which speak only as of their dates.

We cannot predict all the risks and uncertainties that may impact our business, financial condition or results of operations. Accordingly, the forward-looking statements in this prospectus should not be regarded as representations that the results or conditions described in such statements will occur or that our objectives and plans will be achieved. These forward-looking statements are found at various places throughout this prospectus and include information concerning possible or projected future results of our operations, including statements about potential acquisition or merger targets, strategies or plans; business strategies; prospects; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results; and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to a variety of factors and risks, including, but not limited to, those set forth under “Risk Factors” starting on page 11 of this prospectus.

Many of those risks are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. All subsequent written and oral forward-looking statements concerning other matters addressed in this prospectus and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this prospectus.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

This prospectus contains statistical data, estimates and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. While we believe the industry and market data included in this prospectus are reliable and are based on reasonable assumptions, these data involve many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in this prospectus.

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ^®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names.

As a clinical-stage therapeutic device company, describing our business involves referencing certain technical terms and acronyms. We are providing the following glossary to assist readers with certain technical terms and acronyms and to also define certain frequently used terms.

“ACA” means the Affordable Care Act, a comprehensive reform law which increases health insurance coverage for the uninsured and implements reforms to the health insurance market.

“CCPA” means the California Consumer Privacy Act, a state statute intended to enhance privacy rights and consumer protection for residents of California.

“CE Certificate” means the CE mark that is placed on the backside of certain products sold in the European Economic Area and the European Union.

“CE” means that the manufacturer or importer of a commercial product affirms the product’s conformity with European health, safety and environmental safety standards.

“Cellsana” means Cellsana Therapeutics, Inc., a Washington corporation and wholly-owned subsidiary of the Company.

“cGCPs” means current Good Clinical Practices, which is an international ethical and scientific quality standard for designing, conducting, recording and reporting trials that involve the participation of human subjects.

“CMS” means Centers for Medicare and Medicaid Services, a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer Medicaid, the Children’s Health Insurance Program, and health insurance portability standards.

“CPRA” means the California Privacy Rights Act of 2020, is a California ballot proposition that expands California’s consumer privacy law and builds upon the California Consumer Privacy Act of 2018.

“CPT codes” means the Common Procedural Terminology codes, a medical code set that is used to report medical, surgical, and diagnostic procedures and services to entities such as physicians, health insurance companies and accreditation organizations.

“CRF” means Case Report Form, a paper or electronic questionnaire specifically used in clinical trial research.

“CRO” means Contract Research Organizations, which are life sciences companies that provide support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contract basis.

“DME” means durable medical equipment, which are equipment and supplies ordered by a health care provider for everyday or extended use.

“EGFR” means epidermal growth factor receptor, a transmembrane protein that is a receptor for members of the epidermal growth factor family of extracellular protein ligands

“FATCA” means the Foreign Account Tax Compliance Act, which requires all non-U.S. foreign financial institutions to search their records for customers with indicia of a connection to the U.S., including indications in records of birth or prior residency in the U.S., or the like, and to report the assets and identities of such persons to the U.S. Department of the Treasury.

“FDCA” means the Federal Food, Drug, and Cosmetic Act, a set of laws giving authority to the U.S. Food and Drug Administration to oversee the safety of food, drugs, medical devices, and cosmetics.

“FSCA” means Field Safety Corrective Actions, which is an action taken by a manufacturer to reduce a risk of death or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market.

“GBM” means glioblastoma, a rare cancerous tumor that develops in the brain.

“GDPR” means General Data Protection Regulation, a regulation in EU law on data protection and privacy in the EU and the EEA.

“GH” means growth hormone, a peptide hormone that stimulates growth, cell reproduction, and cell regeneration in humans and other animals.

“Hapbee” means Hapbee Technologies, Inc., a Canadian company in which we hold approximately a 18.6% interest as of June 30, 2023.

“HCPCS code set” means Healthcare Common Procedure Coding System, a collection of codes that represent procedures, supplies, products and services which may be provided to Medicare beneficiaries and to individuals enrolled in private health insurance programs.

“HDE” means Humanitarian Device Exemption, a regulatory pathway for products intended for diseases or conditions that affect small, rare populations.

“HIPAA” means Health Insurance Portability and Accountability Act, which is a US law designed to provide privacy standards to protect patients’ medical records and other health information provided to health plans, doctors, hospitals and other health care providers.

“IDE” means an investigational device exemption, a regulatory pathway that allows a significant risk investigational device to be used in a clinical study in order to collect safety and effectiveness data.

“Indolor” means Indolor Therapeutics, Inc., a Washington corporation and wholly-owned subsidiary of the Company.

“IRB” means Institutional Review Board, which is any group that has been formally designated to review and monitor biomedical research involving human subjects.

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended, which is a law intended to encourage funding of small businesses in the U.S. by easing many of the country’s securities regulations.

“MACs” means Medicare Administrative Contractors, which is a private health care insurer that has been awarded geographic jurisdiction to process Medicare Part A and Part B medical claims or Durable Medical Equipment claims for Medicare Fee-For-Service beneficiaries.

“MDD” means major depressive disorder, a common mental health disorder caused by episodes of psychological depression.

“MDR” means medical device reporting, one of the post-market surveillance tools the FDA uses to monitor device performance, detect potential device-related safety issues, and contribute to benefit-risk assessments of these products.

“Mensana” means Mensana Therapeutics, Inc., a Washington corporation and wholly-owned subsidiary of the Company.

“MHLW” means Ministry of Health, Labour and Welfare of Japan, a cabinet level ministry of the Japanese government that provides services on health, labor and welfare.

“MOA” means mechanism of action, which refers to the specific biochemical interaction through which a drug substance produces its pharmacological effect.

“Novocure” means Novocure GmbH, a medical technology manufacturer in Switzerland.

“PMA” means premarket approval application, the FDA process of scientific and regulatory review to evaluate the safety and effectiveness of Class III medical devices.

“PoC” means proof of concept, which is a realization of a certain method or idea in order to demonstrate its feasibility or a demonstration in principle with the aim of verifying that some concept or theory has practical potential.

“RCW” means the Revised Code of Washington, which is the compilation of all permanent laws currently in force in the U.S. state of Washington.

“S.E.M.” means standard error of the mean, a measure of the dispersion of sample means around the population mean.

“TCA” means the EU-UK Trade and Cooperation Agreement, a free trade agreement signed on December 30, 2020, between the EU, the European Atomic Energy Community, and the United Kingdom, that provides for free trade in goods and limited mutual market access in services, as well as for cooperation mechanisms in a range of policy areas, transitional provisions about EU access to UK fisheries, and UK participation in some EU programs.

“Teijin Pharma” means Teijin Pharma Limited, a Japanese pharmaceutical company.

“UKCA Marking” means a certification mark that indicates conformity with the applicable requirements for products sold within Great Britain.

“Zoesana” means Zoesana Animal Health, Inc., a Washington corporation and wholly-owned subsidiary of the Company.

PROSPECTUS SUMMARY

This prospectus summary contains an overview of the information from this prospectus, but may not contain all of the information that is important to you. This prospectus includes specific terms of the offering of our securities, information about our business, and financial data. We encourage you to read this prospectus, including the “Risk Factors” section beginning on page 11 and the financial statements and the notes thereto, in its entirety before making an investing decision. As used in this prospectus, the terms “we,” “us,” “the Company,” “our,” and “EMulate” refer to EMulate Therapeutics, Inc., a corporation organized under the laws of Washington, including our subsidiaries, unless the context indicates a different meaning. All common stock per share numbers and prices included herein have been adjusted to reflect the Common Stock Reverse Split, unless stated otherwise.

Overview

We are on a mission to advance the development and adoption of medical, health, and environmental applications of our low-to-ultra-low radio frequency energy technology. We have invented and patented what we believe to be a groundbreaking investigational technology that utilizes radio frequency energy (RFE) precisely targeted at the low and ultra-low ends of the RFE spectrum (ulRFE^®) to specifically regulate signaling and metabolic pathways on the molecular and genetic levels – without chemicals, radiation or drugs – delivered via a simple-to-use non-invasive therapeutic system. For example, using our proprietary technology in a pre-clinical in vitro study, we derived a ulRFE signal from paclitaxel, a well-understood chemotherapy drug, which is known to have a particular effect on tumor cells by interrupting or significantly slowing the normal metabolic activity of cell division. Our clinical trials using the ulRFE signal of paclitaxel produced some potentially promising survival data (both median progression-free survival data and overall survival data). The similarity of these results does not, in itself, show that the ulRFE signal of paclitaxel produces the same metabolic effect as paclitaxel: recurring GBM (rGBM) patients are not, as a standard, treated in a clinical setting with paclitaxel because the paclitaxel molecule cannot pass through the blood-brain barrier. This circumstance also prevents clinical trial investigators from performing blinded, controlled studies directly comparing (and measuring the statistical significance of) the effects of using the ulRFE signal of paclitaxel with the effects of using the paclitaxel molecule in treating rGBM patients. However, to establish the metabolic correlation between the paclitaxel drug and the ulRFE signal of paclitaxel, we examined the metabolic effect of the ulRFE signal of paclitaxel in pre-clinical in vitro polymerization studies using an a-cellular tubulin protein assay (the protein cells were extracted and purified from bovine brains). These studies showed that the paclitaxel-derived ulRFE signal alone (without the concomitant use of any other chemical or drug, and without the use of any other treatment intervention such as radiation), acts in the same or similar way to the paclitaxel drug upon tubulin (the protein component of microtubules within the cancer cell) simultaneously promoting the assembly and disassembly of microtubules to form stable, non-functioning microtubules, which in turn inhibits the mitotic activity of the cell, decreasing the cell’s disassembly function and in some cases leading to the death of the cancer cell (apoptosis). The shortening and lengthening of microtubules (termed dynamic instability) is necessary for their function as a transportation highway for the cell. Chromosomes, for example, rely upon this property of microtubules during mitosis, according to Drugbank Online.

We expect that, for regulatory purposes, our ulRFE^®therapeutic system will be evaluated by the FDA as a Class III medical device requiring approval of a PMA and/or HDE (see discussion below regarding FDA Premarket Clearance and Approval Requirements).

The human indications that we are initially targeting in our product pipeline include: (i) the glioblastoma multiforme (GBM) and the diffuse midline glioma (DMG) in the field of oncology, (ii) acute and chronic pain in the field of pain management, and (iii) PTSD, ADHD, anxiety and depression in the mental health field. The companion animal indications that we are initially targeting in our product pipeline include solid tumor cancers in the field of oncology, acute and chronic pain in the field of pain management, and anxiety in the mental health field.

Our device has been used in feasibility studies (phase 1 and phase 2 trials) to treat patients with GBM and DMG cancers, and will, consistent with FDA regulation, be used in pivotal clinical trials to treat GBM and DMG patients. These uses are the first of many potential product expressions of our underlying ulRFE platform technology. Our therapeutic medical device has potential treatment applications in a wide range of diseases, including cancer, acute and chronic pain management, mental health conditions, among others.

As of the date of this prospectus, we are not conducting active clinical trials, but we have completed studies with respect to two brain cancer indications: feasibility studies for GBM indication and a compassionate use study for the DMG/diffuse intrinsic pontine glioma (DIPG) indication. In each of these indications, we are ready to initiate pivotal (phase 3) trials, the results of which will be submitted to the FDA for commercialization approval. Initiation of these trials will depend, in part, on trial design (number of patients and the extent to which the trial is controlled and blinded) and cost. We anticipate that the pivotal trial for DMG, based on these factors, will be undertaken sooner than the pivotal trial for GBM.

With respect to acute and chronic pain management and mental health indications, we have completed enabling pre-clinical animal studies and are prepared to initiate feasibility (phase 1) human clinical trials. In its initial review of our device and data to date in oncology indications, the FDA did not make any negative comments regarding safety or effectiveness (although the absence of such comments is not predictive of future determinations by the FDA based on analysis of further trial data from pivotal trials or otherwise). We will be required to perform additional clinical trials in order to obtain FDA approval for the use of our device in treating acute and chronic pain and mental health indications. We plan to seek FDA approval for treating, or for further treatment of, each medical indication within the fields of oncology, pain management and mental health.

Pipeline

The chart below depicts our product pipeline. Columns with rectangular headings describe completed activities, and arrow headings indicate activities yet to be completed.

We are pivotal trial-ready in the therapeutic areas of oncology, specifically in respect of GBM (both newly diagnosed and recurring incidences) and DMG/DIPG. We plan to use $790,000 of funds received from the Offering to finance pivotal clinical trials to treat DMG patients, and $250,000 to finance feasibility clinical trials to treat for serious pain and mental health conditions. Currently, one of the effectiveness challenges with drug treatments for GBM is that existing chemotherapies are unable to pass through the blood/brain barrier. It is thus our hope that our ulRFE signals, with their potentially beneficial effects, freely pass through the entire brain. Prior to Novocure’s Optune approval in 2015 for newly diagnosed GBM, there had not been any clinical improvements for this patient population since the approval of temozolomide in August 1999. Nonetheless, Optune has demonstrated a significant market opportunity in GBM generating $550 million in annual revenues for Novocure. We believe that if our GBM therapeutic product can generate similar or better clinical outcomes as Optune, it will gain significant market share based on clinician, patient, caretaker and investor feedback.

Our subsidiary, Cellsana Therapeutics, Inc. (“Cellsana”) was established in February 2022 to provide transactional and partnering flexibility in the oncology sector.

We are presently conducting pre-clinical studies and collecting data which has to date been encouraging from limited human exposures in the therapeutic area of acute and chronic pain management.

Our subsidiary, Indolor Therapeutics, Inc. (“Indolor”) was established in November 2021 to provide transactional and partnering flexibility in the pain management sector. We are presently conducting pre-clinical studies and collecting data, which has to date been encouraging, from limited human exposures in the therapeutic area of mental health and other CNS conditions.

Our subsidiary, Mensana Therapeutics, Inc. (“Mensana”) was established in November 2021 to provide transactional and partnering flexibility in the mental health/CNS sector.

Our subsidiary, Zoesana Animal Health, Inc., (“Zoesana”) was established in June 2022 to provide transactional and partnering flexibility in the animal health sector.

We have animal proof of concept validated in the therapeutic area of ag-bio.

We own approximately 18.6% of Hapbee Technologies, Inc. (“Hapbee”) a Canadian company that is publicly listed on the TSX Venture Exchange (TSXV) under the symbol “HAPB” and operates in the non-medical, consumer products area. Hapbee is at the commercialization/revenue stage. We founded Hapbee (formerly known as Elevation Technologies, Inc.) as a British Columbia, Canada, company in January 2019, to utilize ulRFE technology for the consumer wellness industry. In October 2020, the shares of Hapbee were listed on the TSX Venture Exchange. EMulate retained its original equity holdings in Hapbee, the remaining shares being held by others who purchased privately before listing or in the public market after listing. Since October 2020, Hapbee has licensed certain recorded ulRFE signals from us for use in our non-regulated, consumer-focused business.

Market Opportunity

The market for pain management is illustrated in the figure below.

Industry Overview

Magnetic fields have been shown to have specific effects on biological systems. For example, they have been found to alter the analgesic effects of opioids, produce analgesic responses, stimulate bone growth, reduce tissue swelling, and promote wound healing in both animal models and humans. Magnetic fields that enhance bone growth and aid in wound healing have been in clinical use for at least 40 years. Pain reduction has been observed in studies of breast reconstruction and breast reduction, post-cesarean operative recovery, and osteoarthritis. Analgesic and opioid use and edema were also reduced in breast reduction, breast reconstruction and post-caesarean patients. Devices generating magnetic fields are effective for treating major depression and obsessive-compulsive disorder, and such devices are recommended for treating acute phase of depression in patients who are resistant and intolerant of other therapeutic options. In concert with the clinical development of magnetic field use, researchers have attempted to define the underlying biological effects that lead to the field’s therapeutic effects and to relate them to one or more of the underlying theories of magnetic field function. This work has included isolated protein systems, cells grown in culture, and organisms ranging from nematodes to mammals, as well as numerical modeling of the functions of the cell.

In addition, magnetic fields have been shown to alter the behavior of the epidermal growth factor receptor (EGFR), an important regulator of cell growth. This receptor, when exposed to a magnetic field, forms clusters in the membrane, which leads to phosphorylation of the receptor and to activation of one of the receptor targets. These changes reflect what occurs when epidermal growth factor binds to EGFR and indicate that the magnetic field activated the receptor in the absence of its natural activator epidermal growth factor. Proliferation and cell migration are affected by magnetic fields. The growth and migration of endothelial cells has been reported to be altered by magnetic fields. Mice injected with a transformed cell line formed smaller tumors when treated with magnetic fields. Additional studies in models of cancer demonstrate effects of magnetic fields. Thus, evidence that magnetic fields have beneficial effects in therapeutics is abundant.

Our technology falls within the mainstream of science regarding the use of magnetic fields for treating maladies and diseases, as described above. It measures and records the electromagnetic emission of molecules and then transmits the electromagnetic radiation fields in an oscillating form by ulRFE. As with all magnetic fields, our ulRFE signals are not attenuated by physiological barriers, such as the blood/brain or enzymatic barriers, and therefore, unlike pharmaceuticals which must pass through the metabolic system, can be applied directly to the affected biological site. Mapping of the ulRFE field and non-attenuation by bone and tissue data have been submitted by us, at the FDA’s request, to the FDA. The use of our ulRFE magnetic field technology is not limited to the treatment of a single indication, but, consistent with the established science referred to above, can potentially be applied to treat multiple serious diseases and conditions such as cancer, acute and chronic pain and mental health conditions, and by overcoming physiological barriers and certain limitations of current pharmaceutical treatments (e.g., blood/brain barrier), may provide a more effective solution than existing treatments.

Competition

To our knowledge, the FDA has not approved or cleared any product that uses the same mechanism of action as our device. The Optune product of Novocure GmbH is an FDA-approved medical device being marketed in the United States and other markets for the treatment of GBM. If our ulRFE therapeutic medical device for treating GBM brain cancer is approved for commercialization by the FDA, the Optune device will be the only product known to us as of the date of this prospectus that will be a competitor for the treatment of GBM. However, Optune uses a markedly different technology. Optune’s technology aims to disrupt cell division through the use of heat-generating electrical energy; our investigational device is thought to disrupt cancer cell division through the use of specific low and ultra-low radiofrequency energy, which has no thermal or ionizing effect.

We may also compete with other products that have come or may come to the oncology market in the future, though we are unaware at this time of any entities directly competing by using our technology. For more detailed information regarding our technology, products, plans regarding clinical trials and plans to seek FDA approval, see the “Business” section.

We have no known competitors in treating DMG/DIPG brain cancer since treatments available in the market are not effective; that is, survival outcomes have not changed notwithstanding attempted treatments.

Several competitors (see e.g., pain management market figure) exist in the pain management and mental health sectors, but to our knowledge, no competing medical device uses the same mechanisms of action as, or provides the benefits of, our ulRFE technology.

In addition, Hapbee’s consumer products face direct and indirect competition from a variety of players engaged in the wearables industry such as Oura Ring, Halo Neuroscience, Muse, NeoRhythm and Calm, as well as software applications that claim to produce benefits like those of wellness products. The table below is a comparison of Hapbee to its competitors.

Our Competitive Strengths

We believe that the following competitive strengths will enable us to compete effectively:

	●	Large market opportunities. Results from testing in animals and humans to date suggest the technology’s potential application for treating solid cancer tumors such as mycosis fungoides, plasma cell tumors, fibrosarcomas, neurofibrosarcomas, schwannomas, malignant melanomas, hemangiopericytomas, hepatic adenocarcinomas, mast cell tumors, adenocarcinomas (mammary), osteosarcomas, chondrosarcomas, apocrine gland adenocarcinomas, undifferentiated carcinomas, and transitional cell carcinomas.

	●	Continual development of innovative technologies and applications. We are a true platform technology because it can potentially be applied to multiple medical indications, and therefore will readily lend itself to continuing product and market development. As discussed below, our technology has potential applications in the non-medical consumer wellness space, and may also be applied in veterinary medicine and agriculture. Currently, our technology is used by us or our licensee, Hapbee, in over ten applications.

	●	Technology that is designed to be used, as it has been used to date in investigations for the treatment of GBM, DMG, and acute and chronic pain conditions to emulate the therapeutic effects of many drugs/drug combination treatments for not one, but many serious disease indications and conditions.

	●	Technology presents a less expensive alternative, as compared to drug development, for developing potential disease and condition treatments. It takes less time and expense for us to develop a therapeutic product because we do not need to invent the molecule from which the relevant ulRFE signal is derived; rather, we measure and record the electromagnetic emissions of proven molecules for transmission to biological systems. As an example, we identified two lead indications as candidates for clinical investigation, pain management and mental health. For each of these indications, it took less than 12 months and $500,000 to take a product from concept to clinic-readiness.

	●	Our medical device is portable, lightweight, and easy to use, comparing favorably to other therapeutic products in the market.

Moreover, when it comes to the use of our technology for treating GBM, our therapeutic medical device has strong potential market advantages. As illustrated in the graphic above, it features:

	●	Ability to reproduce and deliver MOA of multiple drugs/combination therapies

	●	Freely penetrates the brain and does not generate thermal or ionizing energy

	●	Response within 23 to 28 days

	●	3+ month rGBM survival improvement

	●	User-friendly

	●	No need to shave hair, non-stigmatizing

	●	Lightweight 3-ounce controller

	●	12 to 16 hour battery life

Our Growth Strategies

	●	Continuous focus on product innovation.

	●	We believe there is a serious need for our ulRFE therapies in both U.S. and international markets and we aim to drive adoption and utilization of our products by leveraging additional clinical studies and market education.

Our business plan includes a strategy for the treatment of multiple disease indications. Because of the high, unmet need in treatments for multiple rare diseases or conditions, our initial strategy for the oncology market is to target the treatment of rare diseases and conditions and then, under appropriate regulatory and business conditions, to target larger oncology markets such as lung cancer and breast cancer. Our ulRFE signal derived from paclitaxel, a well understood chemotherapy, has the potential to affect several tumor types, as initially demonstrated in the treatment of glioblastoma in adult patients and of DMG/DIPG in pediatric patients, presenting a potential for improving quality of life and extending life in patients with other cancers. Further DMG/DIPG and GBM clinical trials are expected to support further development of our investigational medical device and the paclitaxel ulRFE signal for the potential treatment of many other solid tumor types. The successful completion of these clinical trials will provide the basis for us to initiate and pursue other clinical trials using the paclitaxel ulRFE signal.

Our broader business strategy includes the development of ulRFE signals for the treatment of other oncology indications, as well as other serious disease indications. We plan to out-license our technology to other companies that are active, or interested in becoming active, in treating particular indications. As an alternative to licensing our technology, we can, directly or through our vertical market subsidiaries, partner or combine with other companies. In these arrangements, we will have the flexibility to develop multiple market entries and grant rights to the use of our technology to various market participants. Initial licensing and distribution transactions with Teijin Pharma (Japan; 2016) and Sayre (India; 2018) to treat GBM and DMG provide third-party validation of this business approach.

In the next 12 to 18 months, with appropriate funding, we plan to (1) initiate pivotal clinical trials for GBM and DMG indications, (2) initiate or continue feasibility trials in pain management and mental health, (3) establish partnering and/or licensing relationships for treating additional indication in humans, and (4) establish partnering and/or licensing relationships for treating indications in animals and for advancing bio-agriculture business initiatives. These plans and additional milestones are illustrated in the following image.

Hapbee in-licenses our technology for use in the non-medical consumer wellness and lifestyle space. Other potential market opportunities are present in veterinary medicine and agriculture.

The achievement of these milestones will depend on our ability to raise sufficient funds, and the achievement of certain of the milestones described above (e.g., commercial launch of a product for treating DMG brain cancer) will depend, in material part, on the FDA’s decision to approve relevant products for commercialization, which depends on the results of future clinical trials. In many product cases, however, value would be realized from our licensing of the related technology to companies or organizations that operate, or desire to operate, in the markets in which such technology applies. The level of such product value would be increased, but not determined solely, by or with respect to the FDA’s approval of the product for commercialization.

COVID-19 Pandemic

Starting in late 2019, a novel strain of the coronavirus, or COVID-19, began to rapidly spread around the world. At this time, there continues to be significant volatility and uncertainty relating to the full extent to which the COVID-19 pandemic and the various responses to it will impact our business, operations and financial results.

Most states and cities have at various times instituted quarantines, restrictions on travel, “stay at home” rules, social distancing measures and restrictions on the types of businesses that could continue to operate, as well as guidance in response to the pandemic and the need to contain it. As a result, the COVID-19 pandemic may affect the operations of the FDA and other health authorities, including such authorities in Europe, which could result in delays of reviews and approvals. While there have been no specific notices of delay from federal or foreign government authorities, potential interruptions, delays, or changes to the operations of the FDA, or of any foreign authority with which we might interact, might impact the approval of any applications we plan and will need to file in the future.

In addition, we are dependent upon certain contract manufacturers, service providers and suppliers, and their ability to reliably and efficiently fulfill our orders is critical to our business success. The COVID-19 pandemic has impacted and may continue to impact certain of our manufacturers, service providers and suppliers. As a result, we may face delays or difficulty sourcing certain products or services, which could negatively affect our business and financial results.

For a further discussion of the impact of the COVID-19 pandemic on our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of COVID-19 Pandemic” and “Risk Factors” sections.

Common Stock Reverse Split

Our Board of Directors and stockholders have approved on August 2, 2023 and August 31, 2023, respectively, that prior to effectiveness of the registration statement of which this prospectus forms a part, we expect to effect a reverse stock split of our issued and outstanding shares of common stock at a ratio of 1 for 2.5. All common stock per share numbers and prices included herein have been adjusted to reflect the Common Stock Reverse Split, unless stated otherwise. In connection with the proposed Common Stock Reverse Split, the authorized shares of Common Stock were increased from 40,000,000 to 100,000,000 shares pursuant to the Articles of Amendment filed on February 16, 2023 with the State of Washington.

Implications of Being a Smaller Reporting Company

We are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares held by non-affiliates equals or exceeds $250 million as of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our shares held by non-affiliates equals or exceeds $700 million as of the prior June 30th. Such reduced disclosure and corporate governance obligations may make it more challenging for investors to analyze our results of operations and financial prospects.

For additional information, see “Risk Factors - Because we are a ‘smaller reporting company,’ we may take advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less company information than they would receive from a public company that is not a smaller reporting company” and “As a ‘smaller reporting company,’ we may at some time in the future choose to exempt our Company from certain corporate governance requirements that could have an adverse effect on our public shareholders.”

Implications of Being an Emerging Growth Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. We will remain an emerging growth company for up to five years or until the earliest of (1) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (2) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934 (the “Exchange Act”), which would occur on the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period, or (3) if the market value of our Common Stock held by non-affiliates exceeds $700 million as of any December 31 before that time, in which case we would no longer be an emerging growth company as of the following December 31. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, we may:

	●	present only two years of audited financial statements, plus unaudited condensed financial statements for any interim period, and related management’s discussion and analysis of financial condition and results of operations in this prospectus;

	●	avail ourselves of the exemption from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley;

	●	provide reduced disclosure about our executive compensation arrangements; and

	●	not require stockholder non-binding advisory votes on executive compensation or golden parachute arrangements.

In addition, under the JOBS Act, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period, and, as a result we will adopt new or revised accounting standards on relevant dates on which adoption of such standards is required for other public companies.

Our Corporate History

We are a Washington corporation incorporated on February 7, 2002 under the name WavBank, Inc. In June 2003, we amended our Articles of Incorporation to reflect the designation of Series A Preferred Stock. In February 2006, we amended our Articles of Incorporation to change our name to Nativis, Inc. In February 2012, we amended our Articles of Incorporation to reflect the designation of Series A-1 Preferred Stock. In February 2013 and June 2014, we amended our Articles of Incorporation to reflect the designation of additional shares of Series A-1 Preferred Stock. In February 2019, we amended our Articles of Incorporation to change our name to EMulate Therapeutics, Inc. In February 2023, we amended our Articles of Incorporate to increase the authorized shares of Common Stock from 40,000,000 to 100,000,000.

On October 8, 2022, our Board of Directors (the “Board”) approved the mandatory conversion of all Series A-1 Preferred shares into shares of common stock at the Voluntary Conversion Price (as defined in our Amended and Restated Articles of Incorporation) equal to $4.6875 upon the effectiveness of the registration statement of which this prospectus forms a part. Accordingly, each Series A-1 Preferred shareholder will be deemed to have exercised his or her option pursuant to Section 2(c)(i)(B) of our Amended and Restated Articles of Incorporation to convert all of his, her or our Series A-1 Preferred shares at the Voluntary Conversion Price upon consummation of this Offering.

Our principal executive offices are located at 13810 SE Eastgate Way, Suite 560, Bellevue, Washington 98005, and our telephone number is (425) 415-3140. Our corporate website is https://emulatetx.com/. Information available on this website is not incorporated by reference in and is not deemed to be a part of this prospectus or the registration statement of which this prospectus is a part.

THE OFFERING

We expect to effect the Common Stock Reverse Split prior to effectiveness of the registration statement of which this prospectus forms a part. Share information below is presented on a post-reverse stock split basis.

Issuer:		EMulate Therapeutics, Inc.

Securities Offered:		2,300,000 shares of Common Stock, at an assumed public offering price of $5 per share of Common Stock, which is the midpoint of the range set forth on the cover page of this prospectus.

Over-allotment option:		We have granted to the representative of the underwriters (“Representative”) a 30-day option to purchase up to 345,000 additional shares of our Common Stock at a public offering price of $5 per share, which is the midpoint of the range set forth on the cover page of this prospectus, less the underwriting discounts payable by us, in any combination solely to cover over-allotments, if any.

Representative’s Warrants:		We have agreed to issue to the Representative warrants to purchase a number of shares of Common Stock equal in the aggregate to 7% of the total number of shares issued in this Offering. The Representative’s Warrants will be exercisable at a per share exercise price equal to 110% of the public offering price per share of Common Stock sold in this Offering. The Representative’s Warrants will be exercisable at any time and from time to time, in whole or in part, during the five year period commencing six (6) months from the commencement date of sales in this Offering. The registration statement of which this prospectus forms a part also registers the shares of Common Stock issuable upon exercise of the Representative’s Warrants. See “Underwriting” for more information.

Common Stock to be outstanding after this offering:		13,862,212 Shares (or 14,207,212 shares if the underwriters exercise their option to purchase additional shares in full).

Use of proceeds:		Based upon an assumed public offering price of $5 per Share, which is the midpoint of the range set forth on the cover page of this prospectus, we estimate that we will receive net proceeds from this Offering, after deducting the underwriting discounts and the estimated offering expenses payable by us, of approximately $[●] million (or approximately $[●] million if the underwriters’ option to purchase up to 345,000 additional shares of our common stock from us is exercised in full). We intend to use the net proceeds of this Offering primarily for general corporate purposes, including without limitation clinical trials, preclinical research and development, technology development, outstanding accounts payable and working capital. For use of the net proceeds of this Offering by therapeutic area and additional information, see “Use of Proceeds.”

Proposed Nasdaq Capital Market Trading Symbol and Listing:		We have applied to list our Common Stock on Nasdaq under the symbol “EMTX.” We believe that upon the completion of this Offering, we will meet the standards for listing on Nasdaq. The closing of this Offering is contingent upon the successful listing of our Common Stock on Nasdaq.

Risk Factors:		See “Risk Factors” beginning on page 11 and the other information contained in this prospectus for a discussion of factors you should carefully consider before investing in our securities.

Lock-up:		We, our directors, executive officers, and shareholders who own 5% or more shares of our outstanding Common Stock have agreed, or will agree, with the underwriters not to offer for sale, issue, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of our capital stock or any securities convertible into or exercisable or exchangeable for shares of our capital stock; in the case of the Company, the lock-up restrictions shall be for a period of six (6) months following the consummation of the Offering to which this prospectus relates, and in the case of our executive officers, directors, and shareholders beneficially owning 5% or more shares of our Common Stock, the lock-up period shall be for a period of six (6) months following the commencement of sales of the Offering to which this prospectus relates. See “Underwriting” for additional information.

(1)

The number of shares of our common stock to be outstanding after this offering is based on 6,215,279 shares of common stock outstanding as of June 30, 2023, after giving effect to (i) the automatic conversion of all outstanding shares of our Series A Preferred Stock into 726,933 shares of common stock; (ii) the automatic conversion of all outstanding shares of our Series A-1 Preferred Stock into 1,536,000 shares of common stock; and (iii) the automatic conversion of certain convertible promissory notes and accrued and unpaid interest as of June 30, 2023 into 3,084,000 shares of common stock; each in connection with the closing of this offering, and excludes:

	●	159,454 shares of Common Stock issuable upon exercise of warrants to purchase Common Stock;
	●	200,000 shares of Common Stock (49,780 shares of which have been issued and some of which are subject to vesting) issuable upon exercise of options to purchase Common Stock and 3,800,000 shares of our Common Stock (2,905,290 shares of which have been issued and are subject to vesting) issuable upon exercise of Restricted Stock Units to receive Common Stock under our Amended and Restated 2016 Equity Incentive Plan (the “Plan”); and
	●	40,000 shares of our Common Stock issuable upon exercise of the Representative’s warrants to purchase Common Stock.

Unless otherwise indicated, this prospectus reflects and assumes no exercise by the underwriters of their over-allotment option.

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties of which you should be aware before making an investment decision. You should consider all of the information set forth in this prospectus and, in particular, the specific factors set forth under “Risk Factors” in deciding whether to invest in our securities. These risks include, without limitation, the following:

Risks relating to our business and products

	●	Our business and prospects depend heavily on our current investigational products, which have not been approved by the FDA and comparable authorities in other jurisdictions. If we are unable to obtain regulatory approvals and commercialize our products, or are significantly delayed or limited in doing so, our business and prospects will be materially harmed.

	●	To date, we have not generated any operating profits, and due to our long-term research and development efforts, we have a history of incurring substantial operating losses.

	●	We have suffered recurring losses from operations and have a net capital deficiency that raises substantial doubt about our ability to continue as a going concern.

	●	We may not be successful in achieving market acceptance of our products by healthcare professionals, patients and/or third-party payers in the timeframes we anticipate, or at all, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

	●	Failure to secure and maintain adequate coverage and reimbursement from third-party payers could adversely affect acceptance of our products and reduce our revenues.

	●	Quality control problems with respect to devices and components supplied by third-party suppliers could have a material adverse effect on our reputation, our clinical studies or the commercialization of our products and, as a result, a material adverse effect on our business, prospects, financial condition and results of operations.

	●	Continued testing of our products may not yield successful results and could reveal currently unknown aspects or safety hazards associated with our products.

	●	Because of the specialized nature of our business, the termination of relationships with our key employees, consultants and advisors may be detrimental to our business.

	●	Product liability suits, whether or not meritorious, could be brought against us and result in expensive and time-consuming litigation, payment of substantial damages and/or expenses and an increase in our insurance rates.

	●	Other future litigation and regulatory actions could have a material adverse impact on the Company.

	●	Our products face certain risks, including from cyber security breaches and data leakage. We are also subject to privacy and data security laws.

	●	Legislative and regulatory changes in the U.S. and in other countries regarding healthcare and government-sponsored programs may adversely affect us.

	●	We are subject to ongoing and extensive post-marketing regulation by the FDA and comparable authorities in other jurisdictions, which could cause us to incur significant costs to maintain compliance.

	●	Modifications to our products may require regulatory approvals and our regulators may not agree with our conclusions regarding whether new approvals are required. Regulatory authorities may require us to cease promoting or to recall the modified versions of our products until such approvals are obtained.

	●	In addition to FDA requirements, we will spend considerable time and money complying with other federal, state, local and foreign rules, regulations and guidance.

	●	If we, our collaborative partners, our contract manufacturers, or our component suppliers fail to comply with regulations, the manufacturing and distribution of our products could be interrupted.

	●	Our products could be subject to recalls that could harm our reputation and financial results.

	●	If our products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

	●	We may be subject to fines, penalties or injunctions if we are determined to be promoting the use of our products for unapproved or off-label uses.

	●	We are affected by and subject to environmental laws and regulations that could be costly to comply with or that may result in costly liabilities.

	●	Changes in U.S. patent law could impair our ability to protect our intellectual property.

	●	Future regulatory action remains uncertain.

	●	Our product candidates will remain subject to ongoing regulatory review even after they receive marketing approval, and if we fail to comply with continuing regulations, we could lose these approvals and the sale of any of our approved commercial products could be suspended.

	●	We depend extensively on our proprietary technology, and we must protect those assets in order to preserve our business.

	●	Due in part to our limited financial resources, we may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates, and/or we may be unable to pursue the pre-clinical studies or clinical trials that we would like to pursue.

	●	If the third parties on which we rely for the conduct of our clinical trials and results do not perform our clinical trial activities in accordance with good clinical practices and related regulatory requirements, we may be unable to obtain regulatory approval for or commercialize our product candidates.

	●	With the exception of certain oncology areas that are wholly unserved with viable treatments, the oncology, pain management and mental health treatment industries in which our Company competes is intensely competitive, and we compete with companies with significantly greater resources.

Risks Related to Our Common Stock and this Offering

	●	There has been no public market for our Common Stock prior to this Offering, and an active market in which investors can resell their shares of our Common Stock may not develop.

	●	Volatility in the market price of our Common Stock may prevent investors from being able to sell their Common Stock at or above the initial public offering price.

	●	Certain recent initial public offerings with smaller public floats have experienced extreme price volatility that was seemingly unrelated to company performance. Such volatility may make it difficult for prospective investors to assess the rapidly changing value of our Common Stock.

	●	We may not be able to satisfy the continued listing requirements of Nasdaq or maintain a listing of our Common Stock on Nasdaq.

	●	We have considerable discretion as to the use of the net proceeds from this Offering and we may use these proceeds in ways with which you may not agree.

	●	You will experience immediate and substantial dilution as a result of this Offering.

	●	We do not expect to declare or pay dividends in the foreseeable future.

	●	Future issuances of our Common Stock or securities convertible into, or exercisable or exchangeable for, our Common Stock, or the expiration of lock-up agreements that restrict the issuance of new common stock or the trading of outstanding common stock, could cause the market price of our Common Stock to decline and would result in the dilution of your holdings.

	●	Future issuances of debt securities, which would rank senior to our Common Stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our Common Stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our Common Stock.

Investing in our securities involves a high degree of risk. You should carefully consider and evaluate all of the information contained in this prospectus before you decide to purchase our Common Stock. The risks and uncertainties described in this prospectus are not the only ones we may face. Additional risks and uncertainties that we do not presently know about or that we currently believe are not material may also adversely affect our business, business prospects, results of operations or financial condition. Any of the risks and uncertainties set forth herein, could materially and adversely affect our business, results of operations and financial condition. This could cause the market price of our Common Stock to decline, perhaps significantly, and you may lose part or all of your investment.

Our business and prospects depend heavily on our current investigational products, which have not been approved by the FDA. Even if we receive FDA approval for our products, they will remain subject to ongoing regulatory review. If we are unable to obtain regulatory approvals and commercialize our products, or are significantly delayed or limited in doing so, our business and prospects will be materially harmed.

Almost all of our revenues will, in the near term, derive from sales and royalties from sales of our investigational therapeutic medical devices, if approved, for the treatment of newly diagnosed and recurrent GBM, DMG, acute and chronic pain, mental health and CNS conditions, and Hapbee licensing agreements and, potentially, dividends from Hapbee based on the earnings from consumer use products that help with sleep, focus, and other life-improving sensations. The commercial success of our products and our ability to generate and maintain revenues from the sale of our products will depend on a number of factors, including:

In addition, the promotion of our products will be limited to approved indications, which will vary by geography. We anticipate that the labeling for our therapeutic medical devices in the U.S. will be limited in certain respects, which may limit the number of patients to whom it is prescribed. In addition, the labeling for Hapbee consumer use products contains certain limitations that may adversely affect adoption.

Our ability to generate future revenues will also depend on achieving regulatory approval of, and eventual commercialization of, our products for additional indications and in additional geographies, which is not guaranteed. Our near-term prospects are substantially dependent on our ability to obtain regulatory approvals on the timetable we have anticipated, and thereafter to further successfully commercialize our products for additional indications. Regulatory changes or actions in areas in which we operate or propose to operate may further affect our ability to obtain regulatory approvals on our anticipated timetable. If we are not able to receive such approvals, meet other anticipated milestones, or further commercialize our products, or are significantly delayed or limited in doing so, our business and prospects will be materially harmed and we may need to reduce expenses by delaying, reducing or curtailing the development of our products and we may need to raise additional capital to fund our operations, which we may not be able to obtain on favorable terms, if at all.

To date, we have not generated any operating profits, and due to our long-term research and development efforts, we have a history of incurring substantial operating losses.

We were founded in 2002 and have a history of incurring substantial operating losses. We anticipate continuing to incur significant costs associated with developing and commercializing our products for approved indications including signal development, device hardware and software development, product sales, marketing, manufacturing, and distribution expenses. We expect our research, development, and clinical study expenses to increase in connection with our ongoing activities and as additional indications enter clinical development and as we advance our product development. Our expenses could increase beyond expectations if, for example, we are required by the FDA, or other regulatory agencies or similar governing bodies, to change manufacturing processes for our products or to perform clinical, nonclinical or other types of studies in addition to those that we currently anticipate. Our revenues are dependent, in part, upon the size of the markets in the jurisdictions in which we receive regulatory approval, the accepted price for our products and the ability to obtain reimbursement at the accepted applicable price. If the number of addressable patients is not as significant as we or our strategic partners and licensees estimate, the indications approved by regulatory authorities are narrower than we expect or the eligible population for treatment is narrowed by competition, regulatory approvals, physician choice or treatment guidelines, we may not generate significant revenues. If we are not able to generate significant revenues, we may never be sustainably profitable. As discussed in Note 1 to the financial statements, we have suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about our ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the financial statements.

We have material weaknesses in our internal control over financial reporting. If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Prior to this Offering, due to accounting resource constraints, we have had limited review controls. These constraints have resulted in (1) a lack of internal segregation of duties, since we have a limited administrative staff, and (2) lack of internal controls structure review. As a result of these constraints, we have a material weakness in our internal control over financial reporting.

Our management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist. All responsibility for accounting entries and the creation of financial statements is held by a single person, though we have previously employed additional accounting staff and currently engages multiple accounting consultants for accounting, tax and audit support. To remedy this situation and remove the material weakness, we would need to hire additional staff and/or financial consultant support. In May 2022, we engaged a finance and accounting CPA firm to add a layer of public reporting expertise and assist with internal controls. Currently, we are unable to hire additional staff to facilitate greater segregation of duties but will reassess our capabilities after completion of the offering.

In connection with this Offering, we intend to begin the process of documenting, reviewing and improving our internal controls and procedures as a public company for compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, which will require annual management assessment of the effectiveness of our internal control over financial reporting. To comply with the requirements of being a public company, we have undertaken various actions, and will take additional actions, such as remediating the material weaknesses described above, implementing additional internal controls and procedures and hiring internal audit staff or financial consultants. Testing and maintaining internal controls can divert our management’s attention from other matters that are important to the operation of our business. Additionally, when evaluating internal controls over financial reporting, we may identify additional material weaknesses that it may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. If we identify any additional material weaknesses in our internal control over financial reporting or is unable to remediate the material weakness described above or comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting once it is no longer an emerging growth company, or if we are unable to conclude in our quarterly and annual reports that our disclosure controls and procedures are effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

In addition, if we fail to remediate any material weakness, including the material weaknesses described above, our financial statements could be inaccurate and we could face restricted access to capital markets. Our small size and internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. Moreover, our internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed.

If any governmental authority were to require marketing authorization or similar certification for the Hapbee consumer use products, or for any other product that we or our partners sell and which we or our partners do not believe requires marketing authorization, we or our partners could be subject to regulatory enforcement action and/or be required to cease selling or recall the product pending receipt of marketing authorization from such governmental authority, which can be a lengthy and time-consuming process, harm financial results and have long-term negative effects on our operations.

We do not, as of the date of this prospectus, have any plans to market or sell any of our products, including those licensed in the future to any of our partners, as a consumer wellness or lifestyle product in the non-medical field. Should we develop such plans, the risk factors applicable to Hapbee discussed below would apply also to us or our future partners.

Hapbee in-licenses our technology for use in the non-medical consumer wellness and lifestyle space. Hapbee commercializes its consumer use products for help with sleep, focus, and other life-improving sensations. Neither we nor Hapbee has obtained any medical device clearance, marketing authorization, or approval from any governmental authority for our technology. Hapbee has concluded that its consumer wellness products are not medical devices and do not require clearance, marketing authorization, or approval from the FDA or similar marketing authorization or certification from such other regulatory authorities. However, regulatory authorities may disagree with that conclusion, and if they do, Hapbee may be required to obtain clearance, marketing authorization, or approval, or other certification to continue to sell the products.

Obtaining clearance, marketing authorization or approval to sell the Hapbee consumer use products as medical devices is a time-consuming and costly process and Hapbee may be precluded from selling if it is required to obtain marketing authorization, such as a clearance or approval, or other certification. If granted, a clearance, marketing authorization, or approval could require conditions to sale, for example, a prescription requirement. If regulatory authorities require such clearance, marketing authorization, or approval for the Hapbee consumer use products, Hapbee could be subject to regulatory enforcement action and/or required to cease selling or recall the product in the corresponding jurisdiction pending receipt of such clearance, marketing authorization, or approval, which can be a lengthy and time-consuming process. In addition, Hapbee may be required to modify the product’s functionality or limit the product’s marketing claims, whether or not Hapbee obtains such clearance, marketing authorization, or approval. In any such event, our business could be substantially harmed.

Our clinical studies could be delayed or otherwise adversely affected by many factors, including difficulties in enrolling patients.

Clinical testing can be costly and take many years, and the outcome is uncertain and susceptible to varying interpretations. Moreover, success in pre-clinical and early clinical studies, including feasibility studies, does not ensure that large-scale studies will be successful or predict final results. Acceptable results in early studies may not be replicable in later studies. A number of companies in therapeutics industries have suffered significant setbacks in advanced clinical studies, even after promising results in earlier studies. Negative or inconclusive results or adverse events or incidents during a clinical study could cause the clinical study to be redone or terminated. In addition, failure to appropriately construct clinical studies could result in high rates of adverse events or incidents, which could cause a clinical study to be suspended, redone or terminated. Our failure or the failure of third-party participants in our studies to comply with their obligations to follow protocols and/or legal requirements may also result in our inability to use the affected data in our submissions to regulatory authorities.

The timely completion of clinical studies depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. We may experience difficulties in patient enrollment in our clinical studies for a variety of reasons, including:

If we have difficulty enrolling and retaining a sufficient number or diversity of patients to conduct our clinical studies as planned, or encounter other difficulties, we may need to delay, terminate or modify ongoing or planned clinical studies, any of which would have an adverse effect on our business.

If we are unable to develop an adequate sales and marketing organization or contract with third parties to assist us, we may not be able to successfully commercialize our products for current and future indications.

To achieve commercial success for our products, we must compliantly develop and grow our sales and marketing organization and, as necessary, enter into sales and distribution relationships with third parties to market and sell our products. Developing and managing a sales and marketing organization is a difficult, expensive and time consuming process. We may not be able to successfully develop adequate sales and marketing capabilities to achieve our growth objectives. We compete with other medical device, pharmaceutical and life sciences companies to recruit, hire, train and retain the sales and marketing personnel that we anticipate we will need, and the nature of our products may make it more difficult to compete for sales and marketing personnel. In addition, because our current products require, and we anticipate our future products will require, physician training and education, our sales and marketing organization may need to grow substantially as we expand our approved indications and markets. As a consequence, our expenses associated with building up and maintaining our sales force and marketing capabilities may be disproportionate to the revenues we may be able to generate on sales of our products.

If we are unable to establish adequate sales and marketing capabilities or successful sales and distribution relationships, we may fail to realize the full revenue potential of our products for current and future indications, and we may not be able to achieve the necessary growth in a cost-effective manner or realize a positive return on our investment. In our current and future sales and distribution agreements with other companies, we generally do not and may not have control over the resources or degree of effort that any of these third parties may devote to our products, and if they fail to devote sufficient time and resources to the marketing of our products, or if their performance is substandard, our revenues may be adversely affected.

The success of our business may be dependent on the actions of our collaborative partners.

Our global business strategy includes, in part, the consummation of collaborative arrangements with companies who will support the development and commercialization of our products and technology. For example, we have exclusively licensed or granted rights in Japan and India, see “Business—Intellectual Property.” We may also enter into clinical collaborations with third parties to test our products and technology together with other products and technologies.

When we collaborate with a third party for commercialization of a product in a particular territory, we can expect to relinquish some or all of the control over the future success of that product to the third party in that territory. In addition, our collaborative partners may have the right to terminate applicable agreements, including payment obligations, prior to or upon the expiration of the agreed-upon terms. We may not be successful in establishing or maintaining collaborative arrangements on acceptable terms or at all, collaborative partners may terminate funding before completion of projects, our products may not achieve the criteria for milestone payments, our collaborative arrangements may not result in successful product commercialization, our products may not receive acceptable pricing and we may not derive any revenue from such arrangements. Additionally, our collaborators may not perform their obligations as expected or in compliance with study protocols or applicable laws. Acts or omissions by collaborators may disqualify study data for use in regulatory submissions and/or create liability for us in the jurisdictions in which we operate. Any disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of commercialization, might cause delays or termination of the commercialization of products, might lead to additional responsibilities for us with respect to commercializing products, or might result in litigation or arbitration, any of which would be time-consuming and expensive. To the extent that we are not able to develop and maintain collaborative arrangements, we would need to devote substantial capital to undertake commercialization activities on our own in order to further expand our global reach, and we may be forced to limit the territories in which we commercialize our products.

We may not be successful in achieving market acceptance of our products by healthcare professionals, patients and/or third-party payers in the timeframes we anticipate, or at all, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

We may not achieve market acceptance of our products for current or future indications within the timeframes we have anticipated, or at all, for a number of different reasons, including the following factors:

In particular, our products may not achieve market acceptance for current or future indications because of the following additional factors:

In addition, even if we are successful in achieving market acceptance of our products for GBM, DMG or other indication, we may be unsuccessful in achieving market acceptance of our products for other indications.

There may be other factors that are presently unknown to us that also may negatively impact our ability to achieve market acceptance of our products. If we do not achieve market acceptance of our products in the timeframes we anticipate, or are unable to achieve market acceptance at all, our business, prospects, financial condition and results of operations could be materially adversely affected.

Failure to secure and maintain adequate coverage and reimbursement from third-party payers could adversely affect acceptance of our products and reduce our revenues.

We expect that the vast majority of our revenues will come from third-party payers either directly to us in markets where we provide our products or plan to provide our device candidates to patients or indirectly via payments made to hospitals or other entities providing our products or which may in the future provide our device candidates to patients.

In the U.S., private payers cover the largest segment of the population, with the remainder either uninsured or covered by governmental payers. The majority of the third-party payers outside the U.S. are government agencies, government sponsored entities or other payers operating under significant regulatory requirements from national or regional governments.

Third-party payers may decline to cover and reimburse certain procedures, supplies or services. Additionally, some third-party payers may decline to cover and reimburse our products for a particular patient even if the payer has a favorable coverage policy addressing our products or previously approved reimbursement for our products. Additionally, private and government payers may consider the cost of a treatment in approving coverage or in setting reimbursement for the treatment.

Private and government payers around the world are increasingly challenging the prices charged for medical products and services. Additionally, the containment of healthcare costs has become a priority of governments around the world. Adoption of additional price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our revenues and operating results. If third-party payers do not consider our products or the combination of our products with additional treatments to be cost-justified under a required cost-testing model, they may not cover our products for their populations or, if they do, the level of reimbursement may not be sufficient to allow us to sell our products on a profitable basis.

Reimbursement for the treatment of patients with medical devices around the world is governed by complex mechanisms established on a national or sub-national level in each country. These mechanisms vary widely among countries, can be informal, somewhat unpredictable, and evolve constantly, reflecting the efforts of these countries to reduce public spending on healthcare. As a result, obtaining and maintaining reimbursement for the treatment of patients with medical devices has become more challenging globally. We cannot guarantee that the use of our products will receive reimbursement approvals and cannot guarantee that our existing reimbursement approvals will be maintained in any country.

Our failure to secure or maintain adequate coverage or reimbursement for our products by third-party payers in the U.S. or in the other jurisdictions in which we market our products could have a material adverse effect on our business, revenues and results of operations and cause our stock price to decline.

We may not be successful in securing and maintaining reimbursement codes necessary to facilitate accurate and timely billing for our products or physician services attendant to our products.

Third-party payers, healthcare systems, government agencies or other groups often issue reimbursement codes to facilitate billing for products and physician services used in the delivery of healthcare. Within the U.S., the billing codes most directly related to our products are contained in the Healthcare Common Procedure Coding System (HCPCS code set). The HCPCS code set contains Level I codes that describe physician services, also known as Common Procedural Terminology codes (CPT codes) and Level II codes that primarily describe products. CMS is responsible for issuing the HCPCS Level II codes. The American Medical Association issues HCPCS Level I codes.

No HCPCS codes or CPT codes currently exist to describe physician services related to the delivery of therapy using our products. We may not be able to secure HCPCS codes and CPT codes for physician services related to our products. Our future revenues and results may be affected by the absence of CPT codes, as physicians may be less likely to prescribe the therapy when there is no certainty that adequate reimbursement will be available for the time, effort, skill, practice expense and malpractice costs required to provide the therapy to patients.

Outside the U.S., we have not secured codes to describe our products or to document physician services related to the delivery of therapy using our products. The failure to obtain and maintain these codes could affect the future growth of our business.

There is no assurance that Medicare or the Medicare Administrative Contractors will provide coverage or adequate payment rates for our products.

We anticipate that a significant portion of patients using our products will be beneficiaries under the Medicare fee-for-service program. Failure to secure or maintain coverage or maintain adequate reimbursement from Medicare would reduce our revenues and may also affect the coverage and reimbursement decisions of other third-party payers in the U.S. and elsewhere.

Medicare may classify our therapeutic medical device as durable medical equipment (“DME”). We also expect that, for purposes of regulatory and payor (such as Medicare) approvals of GBM and DMG treatments, we will be viewed as a “fast follower” of Novocure’s (Nasdaq: NVCR) Optune medical device, that is, our device should (but not necessarily will) receive the same regulatory and payor treatment as Optune, which has been approved for commercialization by the FDA for GBM treatment and approved for payment coverage by U.S. government and private insurance providers. Novocure’s Optune device is not classified as DME.

Medicare has the authority to issue national coverage determinations or to defer coverage decisions to its regional Medicare Administrative Contractors (MACs). The fact that only two MACs administer the entire DME program may negatively affect our ability to petition individual medical policy decision-makers at the MACs for coverage. The absence of a positive coverage determination or a future restriction to existing coverage from Medicare or the DME MACs would materially affect our future revenues.

Additionally, Medicare has the authority to publish the reimbursement amounts for DME products. Medicare may in the future publish reimbursement amounts for our products that do not reflect then-current prices for our products. Medicare fee schedules are frequently referenced by private payers in the U.S. and around the world. Medicare’s publication of reimbursement amounts for our products that are below our products’ established prices could materially reduce our revenues and operating results with respect to non-Medicare payers in the U.S. and our other active markets.

Even if our products were authorized by Medicare, CMS requires prior authorization for certain DME items. Claims for such items that did not receive prior authorization before they were furnished to a beneficiary will be automatically denied. In the event Medicare adds one of our products to the list of items requiring prior authorization, our ability to bill and secure reimbursement for patients who would otherwise be covered to use our product under the Medicare fee-for-service program may be reduced.

We cannot provide any assurance that we can access transitional, expedited, or expanded Medicare coverage for our products. CMS is expected to issue rules regarding coverage of emerging technologies; however, no specific information is available about the content of the expected rules and we cannot provide any assurance that any new rules regarding emerging technologies would be applicable to our future products.

We may depend on single-source suppliers for some of our components. The loss of these suppliers could prevent or delay shipments of our products, delay our clinical studies or otherwise adversely affect our business.

In certain jurisdictions, we may source some of the components of our products from only a single vendor. If any one of these single-source suppliers were to fail to continue to provide components to us on a timely basis, or at all, our business and reputation could be harmed. Our policy is to seek and maintain second-source suppliers, but we can provide no assurance that we will secure or maintain such suppliers. We have developed or are in the process of developing second sources for components in all jurisdictions. Various steps must be taken before securing these suppliers, including qualifying these suppliers in accordance with regulatory requirements, but we may never receive such approvals. The risks associated with the failure of our suppliers to comply with strictly enforced regulatory requirements as described below are exacerbated by our dependence on single-source suppliers.

If we experience any deficiency in the quality of, delay in or loss of availability of any components supplied to us by third-party suppliers, or if we switch suppliers or components, we may face additional regulatory delays and the manufacture and delivery of our products would be interrupted for an extended period of time, which could materially adversely affect our business, prospects, financial condition and results of operations. If we are required to obtain prior regulatory approval from the FDA or regulatory authorities or similar governing bodies in other jurisdictions or to conduct a new conformity assessment procedure for our products, regulatory approval for our products may not be received on a timely basis, or at all, which would have a material adverse effect on our business, prospects, financial condition and results of operations.

Quality control problems with respect to devices and components supplied by third-party suppliers could have a material adverse effect on our clinical studies, the commercialization of our products or our reputation and, as a result, a material adverse effect on our business, prospects, financial condition and results of operations.

Our products, which are manufactured by third parties, are highly technical and are required to meet exacting specifications and regulatory requirements, including the QSR. Any quality control problems that we experience with respect to the devices and components supplied by third-party suppliers could have a material adverse effect on our attempts to complete our clinical studies, our operating expenses, the commercialization of our products or our reputation. The failure of our suppliers to comply with strictly enforced regulatory requirements could expose us to regulatory action, including warning letters, product recalls, suspension or termination of distribution, product seizures or civil penalties. If we experience any delay in the receipt or deficiency in the quality of products supplied to us by third-party suppliers, or if we have to switch to replacement suppliers, we may face additional regulatory delays and the manufacture and delivery of our products would be interrupted for an extended period of time, which would materially adversely affect our business, prospects, financial condition and results of operations.

Continued testing of our products may not yield successful results and could reveal currently unknown aspects or safety hazards associated with our products.

Our research and development programs are designed to test the safety and effectiveness of our products through extensive pre-clinical and clinical testing. Even if our ongoing and future pre-clinical and clinical studies are completed as planned, we cannot be certain that their results will support our claims or that the FDA and other regulatory authorities will agree with our conclusions. Success in pre-clinical studies and early clinical studies, including feasibility studies, does not ensure that later clinical studies will be successful, and we cannot be sure that the later studies will replicate the results of prior studies and pre-clinical studies. The clinical study process may fail to demonstrate that our device candidates are safe and effective for the proposed indicated uses, which could cause us to abandon a device candidate and may delay development of others. It is also possible that patients enrolled in clinical studies will experience adverse side effects that have not been previously observed. In addition, our pre-clinical and clinical studies for our device candidates involve relatively small patient populations and, as a result, these studies may not be indicative of future results.

We may experience numerous unforeseen events during, or as a result of, the testing process that could delay or prevent commercialization of our products, including the following:

If unacceptable side effects arise in the development of our products for future indications, we could suspend or terminate our clinical studies or the FDA or other regulatory authorities could order us to cease clinical studies or deny approval of our device candidates for any or all targeted indications, narrow the approved indications for use or otherwise require restrictive product labeling or marketing or require further clinical studies, which may be time-consuming and expensive and may not produce results supporting FDA or other regulatory approval of our products in a specific indication. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the study or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. We expect to have a need to train medical personnel using our devices for clinical studies and upon any commercialization of our products for future indications. Inadequate training in recognizing or managing the potential side effects of our products could result in patient injury or death. Any of these occurrences may harm our business, prospects and financial condition significantly.

Any delay or termination of our clinical studies will delay the filing of submissions for regulatory approvals of our products and ultimately our ability to commercialize our products and generate revenues. Furthermore, we may abandon our products for indications that we previously believed to be promising. Any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Our anticipated growth will place a significant strain on our management and on our operational and financial resources and systems. We could face challenges inherent in efficiently managing a more complex business with an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs. Failure to manage our growth effectively could materially adversely affect our business. Additionally, our anticipated growth will increase the demands placed on our third-party suppliers, resulting in an increased need to carefully monitor the available supply of components and services and to scale up our quality assurance programs. There is no guarantee that our suppliers will be able to support our anticipated growth. Any failure by us to manage our growth effectively could have an adverse effect on our ability to achieve our development and commercialization goals.

Because of the specialized nature of our business, the termination of relationships with our key employees, consultants and advisors may prevent us from successfully operating our business, including developing our products, conducting clinical studies, commercializing our products and obtaining any necessary financing.

We are highly dependent on the members of our executive team, the loss of whose services may adversely impact the achievement of our objectives. While we have entered into employment agreements with each of our key executives, any of them could leave our employment at any time. We do not have “key person” insurance on any of our employees. The loss of the services of one or more of our current employees might impede the achievement of our business objectives.

The competition for qualified personnel in the medical device fields is intense, and we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. Our future success depends upon our ability to attract, retain and motivate highly skilled employees. In order to commercialize our products successfully, we will be required to expand our workforce, particularly in the areas of research and development and clinical studies, sales and marketing and supply chain management. These activities will require the addition of new personnel and the development of additional expertise by existing management personnel. We face intense competition for qualified individuals from numerous pharmaceutical, biopharmaceutical and biotechnology companies, as well as academic and other research institutions. We may not be able to attract and retain these individuals on acceptable terms or at all. Failure to do so could materially harm our business.

We will need substantial additional funding to support our operations and pursue our growth strategy. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

Based on our current operating plan, which is subject to change pursuant to our strategic review, we expect to devote substantial financial resources to our ongoing and planned activities. Significant financial resources will be required to conduct research and development and to potentially seek regulatory approval for our other product candidates. In addition, substantial financial resources will be required to commercialize our products, if approved, including product manufacturing, sales, marketing and distribution for any of our product candidates for which marketing approval is obtained. Accordingly, substantial additional funding will be required to support our continuing and planned operations. If we are unable to raise or otherwise access capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

To the extent we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, your ownership interest will be diluted. In addition, any debt financing may subject us to fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Our need for capital will create additional risks and create potential substantial dilution to existing shareholders.

As mentioned above, we will need to raise additional capital in the future. These capital expenditures are intended to be funded from third party sources and from affiliates if available, including the incurring of debt (which may be converted into common stock) and/or the sale of additional equity securities. As of June 30, 2023, we are indebted to certain individuals in the amount of $14.3 million in principal and interest on promissory notes that are payable, automatically convert, or are convertible on demand; $6.2 million in short-term deferred compensation, of which $6.1 million is for the deferred compensation amounts discussed further below, which is due on demand; and $5.5 million in long-term deferred compensation and postemployment benefits which is payable upon board approval. We have no means to repay our existing debt.

Pursuant to certain agreements, including an arbitrated settlement in 2018 with two of our former employees and co-founders (the “Co-Founders”) regarding the severance amounts payable under their respective employment agreements, we are obligated to make severance payments to the Co-Founders. Payment of the full amount of severance payments has to date been deferred pursuant to a series of agreements, the most recent of which was executed as of August 28, 2023, for a deferral period ending September 29, 2023, and we will remain current in our scheduled payment obligations under those deferral agreements. The unpaid aggregate severance amount as of August 2023 is approximately $5.7 million and interest accrued and unpaid as of August 2023, is approximately $0.1 million. To discharge all of our unpaid obligations to the Co-Founders, we have entered into a Mutual General Release Agreement, dated as of February 6, 2023, with the Co-Founders pursuant to which the Co-Founders have agreed to release all claims they may have against us, including, without limitation, claims for the payment of the deferred severance amounts owed to the Co-Founders and deferred wages payable to the Co-Founders. The agreement is not effective until the date our shares are issued through an initial public offering and trade on Nasdaq. For more information, see “Certain Relationships and Related Persons Transactions—Founders Release Agreement.”

To the extent that any of the debt described is converted to common stock, or converted from preferred stock to common stock, the conversion of this debt will cause additional dilution to existing shareholders, which may be substantial. In addition, the sale of additional equity securities or the sale and conversion of other debt likewise will be dilutive to the interests of current equity holders and such dilution may be substantial. There can be no assurance that such additional financing, whether debt or equity, will be available to us or that it will be available on acceptable commercial terms. Any inability to secure such additional financing on appropriate terms could have a material adverse impact on our business, financial condition and operating results.

Product liability suits, whether or not meritorious, could be brought against us due to alleged defective devices or for the misuse of our products, which could result in expensive and time-consuming litigation, payment of substantial damages and/or expenses and an increase in our insurance rates.

If our current or future devices are defectively designed or manufactured, contain defective components or are misused, or if someone claims any of the foregoing, whether or not meritorious, we may become subject to substantial and costly litigation. For example, we may be sued if our products cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. This may occur if our products are misused or damaged, have a sudden failure or malfunction (including with respect to safety features) or are otherwise impaired due to wear and tear. Even absent a product liability suit, malfunctions of our products or misuse by physicians or patients would need to be remedied swiftly in order to maintain continuous use and ensure effectiveness of our products.

Any product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the device, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products. Even successful defense may require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

Product liability claims could divert management’s attention from our core business, be expensive to defend and result in sizable damage awards against us. We may not have sufficient insurance coverage for all claims. Any product liability claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing continuing coverage, could harm our reputation in the industry and could reduce revenues. Product liability claims in excess of our insurance coverage would be paid out of cash reserves, if any, which could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline. Even if our agreements with our third-party manufacturers and suppliers entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

Other future litigation and regulatory actions could have a material adverse impact on the Company.

From time to time, we may be subject to litigation and other legal and regulatory proceedings relating to our business or investigations or other actions by governmental agencies. No assurances can be given that the results of these or new matters will be favorable to us. An adverse resolution of lawsuits, arbitrations, investigations or other proceedings or actions could have a material adverse effect on our financial condition and results of operations, including as a result of non-monetary remedies. Defending ourselves in these matters may be time-consuming, expensive and disruptive to normal business operations and may result in significant expense and a diversion of management’s time and attention from the operation of our business, which could impede our ability to achieve our business objectives. Additionally, any amount that we may be required to pay to satisfy a judgment, settlement, fine or penalty may not be covered by insurance. Subject to the Washington Business Corporations Act, our articles of incorporation permit us to indemnify any director against any liability, to purchase and maintain insurance against any liability for any director and to provide any director with funds (whether by loan or otherwise) to meet expenditures incurred or to be incurred by such director in defending any criminal, regulatory or civil proceedings or in connection with an application for relief (or to enable any such director to avoid incurring such expenditure). In addition, under our Articles of Incorporation and bylaws (the “Bylaws”) we are obligated to indemnify each of our directors and officers against certain liabilities and expenses arising from their being a director or officer to the maximum extent permitted by Washington law. In the event we are required to make such payments to our directors and officers, there can be no assurance that any of these payments will not be material.

Global economic, political and industry conditions constantly change and unfavorable conditions may have a material adverse effect on our business and results of operations.

We are a global company and plan to have worldwide operations. Volatile economic, political and market conditions, such as political or economic instability, civil unrest, trade sanctions, acts of terrorism in the regions or hostilities, including the conflict between Russia and Ukraine even though none of our current research or business is conducted in Russia or Ukraine, in locations in which we operate may have a negative impact on our operating results and our ability to achieve our business objectives. We may not have advance insight into economic and political trends that could emerge and negatively affect our business. In addition, significant or volatile changes in exchange rates between the U.S. dollar and other currencies may have a material adverse impact upon our liquidity, revenues, costs and operating results.

Additionally, natural disasters and public health emergencies, such as extreme weather events and the COVID-19 pandemic, could have a significant adverse effect on our business, including interruption of our commercial and clinical operations, supply chain disruption, endangerment of our personnel, fewer patient visits, increased patient drop-out rates, delays in recruitment of new patients, and other delays or losses of materials and results.

While the impact of the COVID-19 pandemic is generally subsiding, the lasting impact on our business and results of operations continues to remain uncertain. Due to the COVID-19 pandemic, we have experienced and may continue to experience disruptions that could severely impact our business and clinical studies, which could include:

The extent to which the COVID-19 pandemic or any future pandemic may impact our business and clinical studies will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing guidelines, business closures or business disruptions and the effectiveness of actions taken to contain and treat the disease. The response to the pandemic may result in permanent changes to the environment in which we operate as described above in ways we are unable to predict. The COVID-19 pandemic may also have the effect of heightening many of the other risks described herein.

We are increasingly dependent on information technology systems and are subject to privacy and security laws. Our products and our systems and infrastructure face certain risks, including from cyber security breaches and data leakage.

We increasingly rely upon technology systems and infrastructure. Our technology systems, including our products, are potentially vulnerable to breakdown or other interruption by fire, power loss, system malfunction, unauthorized access and other events. Likewise, data privacy breaches by employees and others with both permitted and unauthorized access to our products and our systems may pose a risk that protected patient information (PI) may be exposed to unauthorized persons or to the public, or may be permanently lost. The increasing use and evolution of technology, including cloud-based computing, creates additional opportunities for the unintentional dissemination of information, intentional destruction of confidential information stored in our systems or in non-encrypted portable media or storage devices. We could also experience a business interruption, information theft of confidential information, or reputational damage from industrial espionage attacks, malware or other cyber incidents, which may compromise our system infrastructure or lead to data leakage, either internally or at our third-party service providers or other business partners.

The size and complexity of our computer systems, and scope of our geographic reach, make us potentially vulnerable to information technology system breakdowns, internal and external malicious intrusion, cyberattacks and computer viruses. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure or properly manage third-party contractors who perform data management services on our behalf, then a security breach could subject us to, among other things, transaction errors, business process inefficiencies, the loss of customers, damage to our reputation, business disruptions or the loss of or damage to intellectual property. Such security breaches could expose us to a risk of loss of information, litigation, penalties, remediation costs and potentially significant liability to customers, employees, business partners and regulatory authorities, including, for example, under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) in the United States and Regulation 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data under GDPR in the EU. If our data management systems (including third party data management systems) do not effectively collect, secure, store, process and report relevant data for the operation of our business, whether due to equipment malfunction or constraints, software deficiencies, or human error, our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired. Any such impairment could materially and adversely affect our financial condition and results of operations.

While we have invested heavily in the protection of data and information technology and in related training, there can be no assurance that our efforts will prevent significant breakdowns, breaches in our systems or other cyber incidents or ensure compliance with all applicable security and privacy laws, regulations and standards, including with respect to third-party service providers that utilize sensitive personal information, including PI, on our behalf.

A security breach, whether of our products, systems or third-party hosting services we utilize, could disrupt treatments being provided by our products, disrupt access to our customers’ stored information, such as patient treatment data and health information, and could lead to the loss of, damage to or public disclosure of such data and information, including patient health information. Such an event could have serious negative consequences, including possible patient injury, regulatory action, fines, penalties and damages, reduced demand for our products, an unwillingness of customers to use our products, harm to our reputation and brand and time-consuming and expensive litigation, any of which could have a material adverse effect on our financial results. We do not currently carry insurance for cybersecurity liability, and the amount of insurance coverage we may purchase in the future may be inadequate. In the future, our insurance coverage may be expensive or not be available on acceptable terms or in sufficient amounts, if at all.

We may choose to, or may be required to, suspend, repeat or terminate our clinical studies if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the studies are not well designed.

Clinical studies must be conducted in accordance with the FDA’s legal requirements and cGCPs and the equivalent laws and regulations applicable in other jurisdictions in which the clinical studies are conducted. The clinical studies are subject to oversight by the FDA, regulatory agencies in other jurisdictions, ethics committees and IRBs at the medical institutions where the clinical studies are conducted. In addition, clinical studies must be conducted with device candidates produced under the FDA’s QSR and in accordance with the applicable regulatory requirements in the other jurisdictions in which the clinical studies are conducted. The conduct of clinical studies may require large numbers of test patients.

The FDA or regulatory agencies in other jurisdictions might delay or terminate our clinical studies of a device candidate for various reasons, including but not necessarily limited to:

Furthermore, the process of obtaining and maintaining regulatory approvals in the U.S. and other jurisdictions can vary substantially based on the type, complexity and novelty of the product involved. If any of our device candidates takes a significantly longer time than we expect to gain regulatory approval due to regulatory requirements, our clinical trials may need to be extended, delayed, repeated, or terminated, which could be lengthy, expensive and uncertain. As a result, we may not be able to obtain regulatory approval or successful commercialization in a timely fashion, or at all, and it could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Legislative and regulatory changes in the U.S. and in other countries regarding healthcare insurance and government-sponsored reimbursement programs (such as Medicare in the United States) may adversely affect our business and financial results.

We rely to a material degree on highly regulated private and government-run health insurance programs for our revenue in most of the countries in which we operate. The laws and regulations regarding health care programs, both public and private, are driven by public policy considerations that may be unrelated to the direct provision of patient care, such as lowering costs or requiring or limiting access to healthcare options. These laws and regulations are very complicated and there are many requirements we must satisfy in order for our products to become and remain eligible for reimbursement under these programs. In many cases we may have limited negotiating power when negotiating reimbursement rates for our products.

In the future, lawmakers and regulators could also pass additional healthcare laws and implement other regulatory changes at both the national and local levels. These laws and regulations could potentially affect coverage and reimbursement for our products. However, we cannot predict the ultimate content, timing or effect of any future healthcare initiatives or the impact any future legislation or regulation will have on us.

With respect to countries outside the U.S., the national competent authorities in the EU member states, the UK, Switzerland, Israel, Japan, and other jurisdictions are also increasingly active in their goal of reducing public spending on healthcare. We cannot, therefore, guarantee that the treatment of patients with our products would be reimbursed in any particular country or, if successfully included on reimbursement lists, whether we will remain on such lists.

Premarket approvals for our therapeutic medical devices could be denied or significantly delayed.

Under the FDCA and FDA regulations, unless exempt, a new medical device may only be commercially distributed after it has received 510(k) clearance, is authorized through the de novo classification process, or is the subject of an approved PMA or Humanitarian Device Exemption (HDE). We expect that our investigational devices will require approval of PMAs or HDEs in order to be marketed. Specifically, we expect that our therapeutic device for the treatment of GBM will require approval of a PMA, while we intend to pursue approval of an HDE for our therapeutic device for the treatment of pediatric DMG.

The PMA process in the U.S. and other jurisdictions can vary substantially, based on the type, complexity and novelty of the product involved and is typically costly, lengthy, and uncertain, and usually requires substantial clinical studies. The PMA process, including the gathering of clinical and pre-clinical data and the submission to and review by the FDA, involves a rigorous premarket review during which the applicant must prepare and provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device and its components regarding, among other things, device design, manufacturing and labeling. Preclinical testing and clinical trials must comply with the regulations of the FDA and other government authorities in the U.S. and similar agencies in other countries. A PMA is not guaranteed and may take considerable time, and the FDA may ultimately respond to a PMA submission with a “not approvable” or “denial” determination and require additional clinical trial or other data that may be expensive and time-consuming to generate and that can substantially delay approval.

A Humanitarian Use Device (HUD) is a “medical device intended to benefit patients in the treatment or diagnosis of a disease or condition that affects or is manifested in not more than 8,000 individuals in the United States per year.” A Humanitarian Device Exemption (HDE) is an application that is similar to a PMA submission, but it is exempt from the effectiveness requirements. FDA approval of an HDE authorizes an applicant to market an HUD subject to certain profit and use restrictions. Like a PMA, an HDE is not guaranteed and may take considerable time, and the FDA may ultimately respond to an HDE submission with a “not approvable” or “denial” determination. For example, the FDA previously did not approve our HDE application for the treatment of pediatric DMG requesting, among other things, additional human clinical data. We have gathered additional information, which we believe answers the questions raised during our prior HDE submission although does not include additional human clinical data. While we intend to submit this information to the FDA in a renewed application for HDE approval for treatment of DMG/DIPG, there is no assurance that the FDA will approve such HDE application and the FDA may continue to request additional human clinical data to support an HDE.

Such delays or refusals, regardless of the cause, could have a material adverse effect on our business, financial condition, and results of operations. The FDA may also change its approval policies, adopt additional regulations or revise existing regulations, or take other actions which may prevent or delay approval or clearance of our products.

The FDA can delay, limit or deny PMA or HDE approval of a device for many reasons, including, but not necessarily limited to:

Similarly, regulators may determine that our financial relationships with our principal investigators resulted in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at the applicable clinical trial site or the utility of the clinical trial itself. Even if we are granted regulatory approval, they may include significant limitations on the indicated uses for the product, which may limit the market for the product.

As a condition of approving a PMA or HDE application, the FDA may also require some form of post-approval study or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional safety and effectiveness data for the device. Failure to conduct a post-approval study in compliance with applicable regulations or to timely complete required post-approval studies or comply with other post-approval requirements could result in withdrawal of approval of a PMA or HDE, which would harm our business.

We are subject to extensive post-marketing regulation by the FDA and comparable authorities in other jurisdictions, which could impact the sales and marketing of our products and could cause us to incur significant costs to maintain compliance. In addition, we may become subject to additional regulation in other jurisdictions as we increase our efforts to market and sell our products outside of the U.S.

We will market and sell our products, if approved, subject to extensive regulation by the FDA and numerous other federal, state and governmental authorities in other jurisdictions. These regulations are broad and relate to, among other things, the conduct of pre-clinical and clinical studies, product design, development, manufacturing, labeling, testing, product storage and shipping, premarket clearance and approval, conformity assessment procedures, premarket clearance and approval of modifications introduced in marketed products, post-market surveillance and monitoring, reporting of adverse events and incidents, pricing and reimbursement, interactions with healthcare professionals, interactions with patients, information security, advertising and promotion and product sales and distribution. Although we intend to initially seek approval from the FDA to market our products in the U.S. for GBM and DMG, the ability to market our products for other indications will require additional FDA approval. We may be required to obtain approval of a new HDE, HDE supplemental application, PMA, or PMA supplemental application for modifications made to our products. This approval process is costly and uncertain, and it could take one to three years, or longer, from the time the application is submitted to the FDA. We may make modifications in the future that we believe do not or will not require additional approvals. If the FDA disagrees and requires new HDEs, HDE supplemental applications, PMAs, or PMA supplemental applications for the modifications, we may be required to recall and to stop marketing the modified versions of our products.

In addition, before our products can be marketed in the EU, our products must obtain a CE Certificate from a notified body. New intended uses of CE marked medical devices falling outside the scope of the current CE Certificate require a completely new conformity assessment before the device can be CE marked and marketed in the EU for the new intended use. The process required to gather necessary information and draw up documentation in order to obtain CE Certification of a medical device in the EU can be expensive and lengthy and its outcome can be uncertain. We may make modifications to our products in the future that we believe do not or will not require notifications to our notified body or new conformity assessments to permit the maintenance of our current CE Certificate. If the competent authorities of the EU member states or our notified body disagree and require the conduct of a new conformity assessment, the modification of the existing CE Certificate or the issuance of a new CE Certificate, we may be required to recall or suspend the marketing of the modified versions of our products.

In Japan, new medical devices or new therapeutic uses of medical devices falling outside the scope of the existing approval by the MHLW require a new assessment and approval for each such new device or use. Accordingly, we may be required to obtain a new approval from MHLW before we launch a modified version of our products or the use of our products for additional indications. Approval time frames from the MHLW vary from simple notifications to review periods of one or more years, depending on the complexity and risk level of the device. In addition, importation into Japan of medical devices is subject to “Quality Management System (QMS) Ordinance,” which includes the equivalent of “Good Import” regulations in the U.S. As with any highly regulated market, significant changes in the regulatory environment could adversely affect our ability to commercialize our products in Japan.

In the U.S. and other jurisdictions, we also are subject to numerous post-marketing regulatory requirements, which include regulations under the QSR related to the manufacturing of our products, labeling regulations, MDR regulations and recordkeeping requirements. In addition, these regulatory requirements may in the future change in a way that adversely affects us. If we fail to comply with present or future regulatory requirements that are applicable to us, we may be subject to enforcement action by the FDA or comparable regulatory authorities in other jurisdictions and notified bodies, which may include any of the following sanctions:

The occurrence of any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Over time, we expect to make modifications to our products that are designed to improve effectiveness, reduce side effects, enhance the user experience or for other purposes. Modifications to our products may require approvals of new HDEs, HDE supplemental applications, PMAs, or PMA supplemental applications, modified or new CE Certificates and analogous regulatory approvals in other jurisdictions or even require us to cease promoting or to recall the modified versions of our products until such clearances, approvals or modified or new CE Certificates are obtained, and the FDA, comparable regulatory authorities in other jurisdictions or our notified body may not agree with our conclusions regarding whether new approvals are required.

Any modification to a device approved through the HDE or PMA pathway that impacts the safety or effectiveness (or probable benefit, in the case of an HDE) of the device requires submission to the FDA and FDA approval of an HDE supplemental application, PMA supplemental application or even a new HDE or PMA, as the case may be. The FDA requires a company to make the determination as to whether a new HDE, HDE supplemental application, PMA or PMA supplemental application is necessary, but the FDA may review our decision. From time to time, we may make changes to the devices, software, packaging, manufacturing facilities and manufacturing processes and may submit HDE supplemental applications or PMA supplemental applications for these changes. FDA may conduct a facility inspection as part of its review and approval process. In addition, it is possible that the FDA will require a human factors (user interface) study. It is also possible that the FDA may require additional clinical data. We can provide no assurance that we will receive FDA approval for these changes on a timely basis, or at all. We also may make additional changes in the future that we may determine do not require the filing of a new HDE, HDE supplemental application, PMA or PMA supplemental application. The FDA may not agree with our decisions regarding whether the submission of new HDEs, HDE supplemental applications, PMAs or PMA supplemental applications are required.

In addition, any substantial change introduced to a medical device or to the quality system that may be certified by a notified body requires a new conformity assessment of the device and can lead to changes to the CE Certificates or the preparation of a new CE Certificate of Conformity. Substantial changes may include, among others, the introduction of a new intended use of the device, a change in its design or a change in our suppliers. Responsibility for determination that a modification constitutes a substantial change lies with the manufacturer of the medical device. We must inform the notified body that conducted the conformity assessment of the products we market or sell in the EU of any planned substantial changes to our quality system or changes to our products that could, among other things, affect compliance with the MDR or the devices’ intended use. The notified body will then assess the changes and verify whether they affect the product’s conformity with the Essential Requirements laid down in Annex I to the MDD or the conditions for the use of the device. If the assessment is favorable, the notified body will issue a new CE Certificate or an addendum to the existing CE Certificate attesting compliance with the Essential Requirements laid down in Annex I to the MDD. There is a risk that the competent authorities of the EU member states or our notified body may disagree with our assessment of the changes introduced to our products. The competent authorities of the EU member states or our notified body also may come to a different conclusion than the FDA on any given product modification.

In addition, medical devices that have obtained a CE Certification under the MDD may in principle continue to be marketed under such CE Certificate until the CE Certificate expires and at the latest until May 27, 2024, provided that the manufacturer complies with the MDR’s additional requirements related to post-marketing surveillance, market surveillance, vigilance, and registration of economic operators and of devices. However, if such medical devices undergo a significant change in their design or intended use, we would need to obtain a new CE Certificate under the MDR for these devices.

If the FDA disagrees with us and requires us to submit a new HDE, HDE supplemental application, PMA, or PMA supplemental application for then-existing modifications and/or the competent authorities of the EU member states or our notified body disagree with our assessment of the change introduced in a product, its design or its intended use, we may be required to cease promoting or to recall the modified product until we obtain approval and/or until a new conformity assessment has been conducted in relation to the product, as applicable. In addition, we could be subject to significant regulatory fines or other penalties. Furthermore, our products could be subject to recall if the FDA, comparable regulatory authorities in other jurisdictions, or our notified body determine, for any reason, that our products are not safe or effective or that appropriate regulatory submissions were not made. Any recall or requirement that we seek additional approvals or clearances could result in significant delays, fines, increased costs associated with modification of a product, loss of revenues and potential operating restrictions imposed by the FDA, comparable foreign regulatory authorities in other jurisdictions, or our notified body. Delays in receipt or failure to receive approvals/certification, or the failure to comply with any other existing or future regulatory requirements, could reduce our sales, profitability and future growth prospects.

There are risks associated with pursuing FDA approval via an HDE pathway, including the possibility that the approval could be withdrawn in the future if the FDA subsequently approves another device for the same intended use, as well as limitations on the ability to profit from sales of the product.

If the FDA subsequently approves a PMA or clears a 510(k) for the HUD or another comparable device with the same indication, the FDA may withdraw the HDE. Once a comparable device becomes legally marketed through PMA or 510(k) clearance to treat or diagnose the disease or condition in question, there may no longer be a need for the HUD and so the HUD may no longer meet the requirements of the FDCA.

Except in certain circumstances, products approved under an HDE cannot be sold for an amount that exceeds the costs of research and development, fabrication, and distribution of the device (i.e., for profit). Currently, under the FDCA, an HUD is only eligible to be sold for profit after receiving HDE approval if the device (1) is intended for the treatment or diagnosis of a disease or condition that occurs in pediatric patients or in a pediatric subpopulation, and such device is labeled for use in pediatric patients or in a pediatric subpopulation in which the disease or condition occurs; or (2) is intended for the treatment or diagnosis of a disease or condition that does not occur in pediatric patients or that occurs in pediatric patients in such numbers that the development of the device for such patients is impossible, highly impracticable, or unsafe. If an HDE-approved device does not meet either of the eligibility criteria, the device cannot be sold for profit.

In addition to FDA requirements, we will spend considerable time and money complying with other applicable federal, state, local and foreign laws, rules, regulations and guidance and, if we are unable to fully comply with such laws, rules, regulations and guidance, we could face substantial penalties.

We are subject to extensive regulation by the U.S. federal government and the states and other countries in which we conduct our business. U.S. federal government healthcare laws apply when we submit a claim on behalf of a U.S. federal healthcare program beneficiary, or when a customer submits a claim for an item or service that is reimbursed under a U.S. federal government-funded healthcare program, such as Medicare, Medicaid, DoD, VA and TRICARE. The laws that affect our ability to operate our business in addition to the Federal Food, Drug, and Cosmetic Act and FDA regulations include, but are not limited to, the following:

Similar laws exist in the EU, individual EU member states and other countries. These laws are complemented by EU or national professional codes of practices.

HIPAA provides data privacy and security provisions for safeguarding medical information. Additionally, states in the U.S. are enacting local privacy laws (e.g., California). In the EU, the GDPR harmonizes data privacy laws and rules on the processing of personal data, including patient and employee data, across the EU. The GDPR has a number of strict data protection and security requirements for companies processing data of EU residents, including when such data is transferred outside of the EU. Additionally, we need to comply with analogous privacy laws in other jurisdictions in which we operate, such as the Israeli Privacy Protection Law, the Asia Pacific Economic Cooperation Privacy Framework, and Japan’s Act on the Protection of Personal Information.

The laws and codes of practices applicable to us are subject to evolving interpretations. Moreover, certain U.S. federal and state laws regarding healthcare fraud and abuse and certain laws in other jurisdictions regarding interactions with healthcare professionals and patients are broad and we may be required to restrict certain of our practices to be in compliance with these laws. Healthcare fraud and abuse laws also are complex and even minor, inadvertent irregularities, or even the perception of impropriety, can potentially give rise to claims that a statute has been violated.

Any violation of these laws could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline. Similarly, if there is a change in law, regulation or administrative or judicial interpretations, we may have to change our business practices or our existing business practices could be challenged as unlawful, which likewise could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline. Fines and penalties for violations of these laws and regulations could include severe criminal and civil penalties, including, for example, significant monetary damages, exclusion from participation in the federal healthcare programs and permanent disbarment of key employees. Any penalties, damages, fines, curtailment or restructuring of our operations would adversely affect our ability to operate our business, our prospects and our financial results. In addition, any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and damage our reputation.

In addition, although we believe that we have the required licenses, permits and accreditation to dispense our products in the future, a regulator could find that we need to obtain additional licenses or permits. We also may be subject to mandatory reaccreditation and other requirements in order to maintain our billing privileges. Failure to satisfy those requirements could cause us to lose our privileges to bill governmental and private payers. If we are required to obtain permits or licenses that we do not already possess, we also may become subject to substantial additional regulation or incur significant expense.

To ensure compliance with Medicare, Medicaid and other regulations, federal and state governmental agencies and their agents, including DME MACs, may conduct audits of our operations to support our claims submitted for reimbursement of items furnished to beneficiaries and health care providers. Depending on the nature of the conduct found in such audits and whether the underlying conduct could be considered systemic, the resolution of these audits could adversely impact our revenue, financial condition and results of operations.

If we, our collaborative partners, our contract manufacturers or our component suppliers fail to comply with the FDA’s QSR or equivalent regulations established in other countries, the manufacturing and distribution of our products could be interrupted, and our product sales and results of operations could suffer.

We, our collaborative partners, our contract manufacturers and our component suppliers are required to comply with the FDA’s QSR and the equivalent quality system requirements imposed by the laws and regulations in other jurisdictions, which are a complex regulatory framework that covers the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products. We cannot assure you that our facilities or our contract manufacturers’ or component suppliers’ facilities would pass any future quality system inspection. If our or any of our contract manufacturers’ or component suppliers’ facilities fails a quality system inspection, the manufacturing or distribution of our products could be interrupted and our operations disrupted. Failure to take adequate and timely corrective action in response to an adverse quality system inspection could force a suspension or shutdown of our packaging and labeling operations or the manufacturing operations of our contract manufacturers, and lead to suspension, variation or withdrawal of our regulatory approvals or a recall of our products. If any of these events occurs, we may not be able to provide our customers with our products on a timely basis, our reputation could be harmed and we could lose customers, any or all of which could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Our products may in the future be subject to recalls. A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, including a third-country authority, or the discovery of serious safety issues with our products, could have a significant adverse impact on our reputation, business and financial results.

The FDA and similar governmental authorities in other jurisdictions have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding that a recall is necessary to protect the public health and welfare because a distributed product presents a reasonable probability of risk of illness or injury or gross consumer deception and the firm has not initiated a recall. In addition, governmental bodies in other jurisdictions have the authority to require the recall of our products in the event of material deficiencies or defects in design or manufacture. Distributors and manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by us or one of our manufacturers could occur as a result of, among other things, component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. The FDA requires that certain classifications of recalls be reported to the FDA within ten working days after the recall is initiated. Requirements for the reporting of product recalls to the competent authorities are imposed in other jurisdictions in which our products are or would be marketed in the future. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA or to the competent authorities of other countries. In the future, we may initiate voluntary recalls involving our products that we determine do not require notification of the FDA or to other equivalent non-U.S. authorities. If the FDA or the equivalent non-U.S. authorities disagree with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect our sales. In addition, the FDA and the equivalent non-U.S. authorities could take enforcement action if we fail to report the recalls when they were conducted. Recalls of our products would divert managerial and financial resources and could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

If our products cause or contribute to a death or a serious injury, or malfunction in certain ways, we will be subject to medical device reporting regulations, which can result in voluntary corrective actions or agency enforcement actions.

Under the FDA MDR regulations and the equivalent regulations applicable in other jurisdictions in which our products are or may be marketed in the future, medical device manufacturers are required to report to the FDA and to the equivalent non-U.S. authorities information that a device has or may have caused or contributed to a death or serious injury or has malfunctioned in a way that would likely cause or contribute to death or serious injury if the malfunction of the device or one of our similar devices were to recur. If we fail to report these events to the FDA or to the equivalent authorities in other jurisdictions within the required time frames, or at all, the FDA or the equivalent authorities in other jurisdictions could take enforcement action against us. Any such adverse event involving our products also could result in future voluntary corrective actions, such as recalls or customer notifications, or agency action, such as inspection or enforcement action. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation and financial results.

The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses for prescription medical products. We may be subject to fines, penalties or injunctions, and reputational harm if we are determined to be promoting the use of our products for unapproved or off-label uses.

Medical devices may be marketed only for the indications for which they are approved. Our promotional materials and training materials must comply with FDA regulations and other applicable laws and regulations governing the advertising and promotion of our products in the U.S. and other jurisdictions.

If the FDA or the competent authorities in other jurisdictions determine that our promotional materials or training constitutes promotion of an unapproved use (i.e. off-label use), they could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled or warning letter, an injunction, seizure, civil fines and criminal penalties. It is also possible that authorities in other federal, state or national enforcement in other jurisdictions might take action if they consider our promotional or training materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, our reputation could be damaged and the commercialization of our products could be impaired.

We are affected by and subject to environmental laws and regulations that could be costly to comply with or that may result in costly liabilities.

We are subject to environmental laws and regulations, including those that impose various environmental controls on the manufacturing, transportation, storage, use and disposal of batteries and hazardous chemicals and other materials used in, and hazardous waste produced by, the manufacturing of our products. We incur and expect to continue to incur costs to comply with these environmental laws and regulations. Additional or modified environmental laws and regulations, including those relating to the manufacture, transportation, storage, use and disposal of materials used to manufacture our products or restricting disposal or transportation of batteries, may be imposed that may result in higher costs.

In addition, we cannot predict the effect that additional or modified environmental laws and regulations may have on us, our third-party suppliers of equipment and our products or our customers.

The oncology and medical device industries are characterized by patent and other intellectual property litigation and disputes, and any litigation, dispute or claim against us may cause us to incur substantial costs, could place a significant strain on our financial resources, divert the attention of management from our business, harm our reputation and require us to remove certain devices from the market.

Whether a product infringes a patent or violates other intellectual property rights involves complex legal and factual issues, the determination of which is often uncertain. Any intellectual property dispute, even a meritless or unsuccessful one, would be time consuming and expensive to defend and could result in the diversion of our management’s attention from our business and result in adverse publicity, the disruption of research and development and marketing efforts, injury to our reputation and loss of revenues. Any of these events could negatively affect our business, prospects, financial condition and results of operations.

Third parties may assert that our products, the methods employed in the use of our products or other activities infringe on their patents. Such claims may be made by competitors seeking to obtain a competitive advantage or by other parties, many of whom have significantly larger intellectual property portfolios than we have. Additionally, in recent years, individuals and groups have begun purchasing intellectual property assets for the purpose of making claims of infringement and attempting to extract settlements from companies like ours. With respect to our current products and the methods employed in the use of our products, the risk of infringement claims is exacerbated by the fact that there are numerous issued and pending patents relating to the treatment of cancer. Because patent applications can take many years to issue, and in many cases remain unpublished for many months after filing, there may be applications now pending of which we are unaware that may later result in issued patents that our products may infringe.

There could also be existing patents that one or more components of our products or other device candidates may inadvertently infringe. As the number of competitors in the market or other device candidates grows, the possibility of inadvertent patent infringement by us or a patent infringement claim against us increases. To the extent we gain greater market visibility, our risk of being subject to such claims is also likely to increase. If a third party’s patent was upheld as valid and enforceable and we were found to be infringing, we could be prevented from making, using, selling, offering to sell or importing our products or other device candidates, unless we were able to obtain a license under that patent or to redesign our products or other device candidates to avoid infringement. A license may not be available at all or on terms acceptable to us, and we may not be able to redesign our products to avoid any infringement. Modification of our products or development of device candidates to avoid infringement could require us to conduct additional clinical studies and to revise our filings with the FDA and other regulatory bodies, which would be time-consuming and expensive. If we are not successful in obtaining a license or redesigning our devices, we may be unable to make, use, sell, offer to sell or import our devices and our business could suffer. We may also be required to pay substantial damages and undertake remedial activities, which could cause our business to suffer.

We may also be subject to claims alleging that we infringe or violate other intellectual property rights, such as copyrights or trademarks, may have to defend against allegations that we misappropriated trade secrets, and may face claims based on competing claims of ownership of our intellectual property. The confidentiality and assignment of inventions agreements that our employees, consultants and other third parties sign may not in all cases be enforceable or sufficient to protect our intellectual property rights. In addition, we may face claims from third parties based on competing claims to ownership of our intellectual property.

We may employ individuals who were previously employed at other medical device companies, and as such we may be subject to claims that such employees have inadvertently or otherwise used or disclosed the alleged trade secrets or other proprietary information of their former employers. Any such litigation, dispute or claim could be costly to defend and could subject us to substantial damages, injunctions or other remedies, which could have a material adverse effect on our business, prospects, financial condition and results of operations and cause our stock price to decline.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our devices.

As is the case with other medical device companies, our success is heavily dependent on our intellectual property rights, and particularly on our patent rights. Obtaining and enforcing patents in the medical device industry involves both technological and legal complexity, and is therefore costly, time consuming and inherently uncertain. In addition, the U.S. has recently enacted and is currently implementing wide-ranging patent reform legislation. Certain U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could further negatively impact the value of our patents, narrow the scope of available patent protection or weaken the rights of patent owners.

We operate in a highly regulated and evolving environment with rigorous regulatory enforcement. Any legal or regulatory action could be time-consuming and costly. If we or the manufacturers or distributors that supply our products fail to comply with all applicable laws and regulations, action by the FDA or other regulatory agencies could result in significant restrictions, including restrictions on the marketing or use of the products we sell or the withdrawal of the products we sell from the market. Any such restrictions or withdrawals could materially affect our reputation, business and operations.

If physicians and patients do not accept our current and future products or if the market for indications for which any product candidate is approved is smaller than expected, we may be unable to generate significant revenue, if any.

Even when any of our product candidates obtain regulatory approval, they may not gain market acceptance among physicians, patients, and third-party payers. Physicians may decide not to recommend our treatments for a variety of reasons including:

If any of our product candidates is approved, but fails to achieve market acceptance or such market is smaller than anticipated, we may not be able to generate significant revenue and our business would suffer.

Intellectual property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our products.

The therapeutic medical device and pharmaceutical industries are characterized by extensive intellectual property litigation and, from time to time, we may become the subject of claims of infringement or misappropriation. Regardless of outcome, such claims are expensive to defend and divert management and operating personnel from other business issues. A successful claim or claims of patent or other intellectual property infringement against us could result in payment of significant monetary damages and/or royalty payments or negatively impact our ability to sell current or future products in the affected category.

We depend extensively on our patents and proprietary technology and the patents, and we must protect those assets in order to preserve our business.

Although we expect to seek patent protection for any devices, in silico products (if any), systems, and processes we discover and/or for any specific use we discover for new or previously known compounds, devices, biologics, products, systems, or processes, any or all of these may not be subject to effective patent protection. In addition, our issued patents may be declared invalid or our competitors may find ways to avoid the claims in the patents.

Our success will depend, in part, on our ability to obtain patents, protect our trade secrets and proprietary knowledge and operate without infringing on the proprietary rights of others. We are the sole assignee of numerous granted United States patents, pending United States patent applications and international patents. The patent position of pharmaceutical and biotechnology firms like us are generally highly uncertain and involves complex legal and factual questions, resulting in both an apparent inconsistency regarding the breadth of claims allowed in United States patents and general uncertainty as to their legal interpretation and enforceability. Accordingly, patent applications assigned to us may not result in patents being issued, any issued patents assigned to us may not provide us with competitive protection or may be challenged by others, and the current or future granted patents of others may have an adverse effect on our ability to do business and achieve profitability.

Moreover, others may independently develop similar products, may duplicate our products, or may design around our patent rights. In addition, as a result of the assertion of rights by a third-party or otherwise, we may be required to obtain licenses to patents or other proprietary rights of others in or outside of the United States. Any licenses required under any such patents or proprietary rights may not be made available on terms acceptable to us, if at all. If we do not obtain such licenses, we could encounter delays in product market introductions during our attempts to design around such patents or could find that the development, manufacture or sale of products requiring such licenses is foreclosed. In addition, we could incur substantial costs in defending suits brought against us or in connection with patents to which we hold licenses or in bringing suit to protect our own patents against infringement.

Due to legal and factual uncertainties regarding the scope and protection afforded by patents and other proprietary rights, we may not have meaningful protection from competition.

Our long-term success will substantially depend upon our ability to protect our proprietary technologies from infringement, misappropriation, discovery and duplication, and avoid infringing the proprietary rights of others. Our patent rights and the patent rights of biotechnology and pharmaceutical companies in general, are highly uncertain and include complex legal and factual issues. Because of this, our pending patent applications may not be granted. These uncertainties also mean that any patents that we own or will obtain in the future could be subject to challenge, and even if not challenged, may not provide us with meaningful protection from competition. Due to our financial uncertainties, we may not possess the financial resources necessary to enforce our patents. Patents already issued to us or our pending applications may become subject to dispute, and any dispute could be resolved against us. Because a substantial number of patents have been issued in the field of therapeutic medical device and because patent positions can be highly uncertain and frequently involve complex legal and factual questions, the breadth of claims obtained in any application or the enforceability of our patents cannot be predicted. Consequently, we do not know whether any of our pending or future patent applications will result in the issuance of patents or, to the extent patents have been issued or will be issued, whether these patents will be subject to further proceedings limiting their scope, will provide significant proprietary protection or competitive advantage, or will be circumvented or invalidated. One of our currently issued patents has expired, and eight of them will expire in the next twelve months.

Also, because of these legal and factual uncertainties, and because pending patent applications are held in secrecy for varying periods in the United States and other countries, even after reasonable investigation, we may not know with certainty whether any products that we (or a licensee) may develop will infringe upon any patent or other intellectual property right of a third party. We believe that our current products and product candidates do not infringe any third-party patents; however, we cannot know for certain whether we could successfully defend our position, if challenged. We may incur substantial costs if we are required to defend our intellectual property in patent suits brought by third parties. These legal actions could seek damages and seek to enjoin testing, manufacturing and marketing of the accused product or process. In addition to potential liability for significant damages, we could be required to obtain a license to continue to manufacture or market the accused product or process.

We may not be able to compete with treatments now being marketed and developed, or which may be developed and marketed in the future by other companies.

Our products will compete with existing and new therapies and treatments for cancer, acute and chronic pain, mental health conditions, and other indications targeted for our technology. We are aware of a number of companies currently seeking to develop alternative therapies or treatment for such diseases and conditions at least in part. Numerous pharmaceutical, biotechnology, drug delivery and medical device companies, hospitals, research organizations, individual scientists, and nonprofit organizations are engaged in the development of alternatives to our technology. Some of these companies have greater research and development capabilities, experience, manufacturing, marketing, financial, and managerial resources than we do. Collaborations or mergers between large pharmaceutical or biotechnology companies with competing treatment technologies could enhance our competitors’ financial, marketing, and other resources. Developments by other medical device companies could make our products or technologies uncompetitive or obsolete. Accordingly, our competitors may succeed in developing competing technologies, obtaining FDA approval for products or gaining market acceptance more rapidly than we can.

Due in part to our limited financial resources, we may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates, and/or we may be unable to pursue the clinical trials that we would like to pursue.

We have limited technical, managerial, and financial resources to determine the indications on which we should focus the development efforts related to our product candidates. Due to our limited available financial resources, we may have curtailed clinical development programs and activities that might otherwise have led to more rapid progress of our product candidates through the regulatory and development processes.

We may make incorrect determinations with regard to the indications and clinical trials on which to focus the available resources that we do have. Furthermore, we cannot assure you that we will be able to retain adequate staffing levels to run our operations and/or to accomplish all of the objectives that we otherwise would seek to accomplish. Our decisions to allocate our research, management, and financial resources toward particular indications or therapeutic areas for our product candidates may not lead to the development of viable commercial products and may divert resources from better opportunities. Similarly, our decisions to delay or terminate product development programs may also cause us to miss valuable opportunities.

If the third parties on which we rely for the conduct of our clinical trials and results do not perform our clinical trial activities in accordance with good clinical practices and related regulatory requirements, we may be unable to obtain regulatory approval for or commercialize our product candidates.

We use independent clinical investigators and other third-party service providers to conduct and/or oversee the clinical trials of our product candidates, and expect to continue to do so for the foreseeable future.

The FDA requires us and our clinical investigators to comply with regulations and standards, commonly referred to as good clinical practices, for conducting, recording, and reporting the results of clinical trials to assure that data and reported results are credible and accurate, and that the trial participants are adequately protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. Third parties may not complete activities on schedule or may not conduct our clinical trials in accordance with regulatory requirements or the respective trial plans and protocols. The failure of these third parties to carry out their obligations could delay or prevent the development, approval, and commercialization of our product candidates or result in enforcement action against us.

Our Company has an evolving business strategy and investors must be willing to accept a substantial degree of uncertainty.

Our strategic focus is on the development of therapeutic medical devices for humans using our ulRFE^® platform technology. We are engaged in ongoing discussions with potential licensees, other strategic partners and institutional or private financing sources, the result of which could add to or alter our current strategic focus, cash needs or ownership structure. Investors must be willing to accept a substantial degree of uncertainty and must be willing to rely upon our Board and management to complete an appropriate business strategy to commercially exploit targeted business opportunities.

The industry in which we compete is intensely competitive, and we compete with companies with significantly greater resources.

The market for our products and services is relatively new and rapidly evolving. Accordingly, it is difficult to predict our future growth rate, if any, and our ultimate size. Moreover, our success is dependent on the popularity of our products and services within this new market, which we cannot predict. We have entered into one licensing agreement for a specific indication in the Japanese oncology market and one distribution agreement for specific indications in the Indian oncology market, but we may experience significantly long processes for additional licensing or for sales in order to monetize our products or services. While we are not aware of any businesses currently developing or using ulRFE technology similar to our technology, the broader life sciences industry is marked by intense competition, including many companies with significantly greater resources, which they could use to attempt to limit our ability to gain market share.

You should consult with your own tax advisor about the tax consequences of investing in our securities.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act based on the following facts. The Company never held itself out as being engaged primarily or proposing to engage primarily in the business of investing, reinvesting or trading in securities, nor does the Company hold itself out as being engaged primarily in such business. None of the Company’s four wholly-owned subsidiaries is engaged in the business of investing, reinvesting or trading in securities, nor does any of them or the Company hold the subsidiaries out as being engaged in such business. As of June 30, 2023, the Company owns approximately 18.6% equity interest in Hapbee, and is Hapbee’s largest shareholder. Hapbee was formed in January 2019 by the Company to commercialize non-regulated consumer applications of the Company’s technology for the consumer wellness industry. Since October 2020, the Company has licensed certain recorded ulRFE signals to Hapbee for use in Hapbee’s non-regulated, consumer-focused business. All of Hapbee’s products are developed and licensed from the technologies of the Company. Pursuant to the terms of these licensing agreements, the Company and Hapbee formed joint steering committees with unanimous consent thresholds to implement the commercialization of these technology licenses. The Company and Hapbee share 50/50 control over these joint steering committees. The sole current source of revenues to the Company are the royalties generated under these licensing agreements. The Company has no current intent to sell any interests, and continues to hold shares in Hapbee to maintain and regulate its technologies and products in part by sustaining a certain level of equity ownership in Hapbee. In addition to being Hapbee’s largest stockholder, the Company exercises control in its capacity as the licensor of the technology used in all of Hapbee’s products and its contractual rights under the steering committees for the licensing agreements. The Board of the Company has made a determination that the non-GAAP value of the Company’s patent portfolio without giving effect to the value of other intellectual property and intangibles would increase the value of the Company’s total assets as of June 30, 2023 from around $3,111,000, as calculated from the US GAAP balance sheet, to around $10,111,000. If the Company’s interest in Hapbee, which was valued at around $1,913,000 as of June 30, 2023, were classified as an investment security, such investment security would comprise only 18.92% of the Company’s assets, far below the 40% threshold under Section 3(a)(1)(C) of the Company Act on an unconsolidated basis as well as below the 45% threshold under Rule 33a-1 on a consolidated basis. The Company believes the Rule 3a-1 exemption and Section 3(b)(1) exemptions are also available to the Company.

The 1940 Act and the rules thereunder contain detailed parameters for the organization and operation of Investment companies. Among other things, the 1940 Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. We intend to conduct our operations so that we will not be deemed to be an investment company under the 1940 Act or otherwise conduct our business in a manner that does not subject us to the registration and other requirements of the 1940 Act. In order to ensure that we are not deemed to be an investment company, we may be limited in the assets that we may continue to own and, further, may need to dispose of or acquire certain assets at such times or on such terms as may be less favorable to us than in the absence of such requirement. If anything were to happen which would cause us to be deemed to be an investment company under the 1940 Act (such as significant changes in the value of our programs or a change in circumstance that results in a reclassification of our interests in our programs for purposes of the 1940 Act), the requirements imposed by the 1940 Act could make it impractical for us to continue our business as currently conducted, which would materially adversely affect our business, financial condition and results of operations. In addition, if we were to become inadvertently subject to the 1940 Act, any violation of the 1940 Act could subject us to material adverse consequences, including potentially significant regulatory penalties and the possibility that certain of our contracts could be deemed unenforceable.

There has been no public market for our Common Stock prior to this Offering, and an active market in which investors can resell their shares of our Common Stock may not develop.

Prior to this Offering, there has been no public market for our Common Stock. We have applied to list our Common Stock on Nasdaq under the symbol “EMTX.” The closing of this Offering is contingent upon the successful listing of our Common Stock on Nasdaq. There is no guarantee that Nasdaq, or any other exchange or quotation system, will permit our Common Stock to be listed and traded.

Even if our Common Stock is approved for listing on Nasdaq, a liquid public market for our Common Stock may not develop. The initial public offering price for our Common Stock has been determined by negotiation between us and the underwriters based upon several factors, including prevailing market conditions, our historical performance, estimates of our business potential and earnings prospects, and the market valuations of similar companies. The price at which the Common Stock is traded after this Offering may decline below the initial public offering price, meaning that you may experience a decrease in the value of your Common Stock regardless of our operating performance or prospects.

Volatility in the market price of our Common Stock may prevent investors from being able to sell their Common Stock at or above the initial public offering price.

After this Offering, the market price for our Common Stock is likely to be volatile, in part because our shares have not been traded publicly. In addition, the market price of our Common Stock may fluctuate significantly in response to several factors, most of which we cannot control, including:

The public offering price of our Common Stock has been determined by negotiations between us and the underwriters based upon many factors and may not be indicative of prices that will prevail following the closing of this Offering. In addition, the stock market in general, and the stock of early-stage companies like ours in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Such rapid and substantial price volatility, including any stock run-up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for investors to assess the rapidly changing value of our stock. Volatility in the market price of our Common Stock may prevent investors from being able to sell their Common Stock at or above the initial public offering price. As a result, you may suffer a loss on your investment.

Certain recent initial public offerings with smaller public floats have experienced extreme price volatility that was seemingly unrelated to company performance. Such volatility may make it difficult for prospective investors to assess the rapidly changing value of our Common Stock.

The trading price of our Common Stock following this Offering is likely to be volatile, and our Common Stock may be subject to rapid and substantial price volatility. There have been recent instances of extreme stock price run-ups followed by rapid price declines following initial public offerings, particularly among companies with relatively smaller public floats, and we expect that such instances may continue and/or increase in the future. Contributing to this risk of volatility are a number of factors. First, our Common Stock is likely to be more sporadically and thinly traded than that of larger, more established companies. As a consequence of this lack of liquidity, the trade of relatively small quantities of Common Stock by our stockholders may disproportionately influence the price of those shares of Common Stock in either direction. The price of our shares of Common Stock could, for example, decline precipitously in the event that a large number of our shares of Common Stock are sold on the market without commensurate demand as compared to a seasoned issuer that could better absorb those sales without adverse impact on its stock price. Second, we are a speculative investment due to our limited operating history, not being profitable, and not expecting to be profitable in the foreseeable future. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares of Common Stock on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established company that has a relatively large public float.

Many of these factors are beyond our control and may decrease the market price of our securities. Such volatility, including any stock run-ups, may be unrelated or disproportionate to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our shares of Common Stock.

Furthermore, the stock market in general, and the market for biotech companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors, as well as general economic, political and market conditions such as recessions or interest rate changes, may seriously affect the market price of our securities, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our securities shortly following this Offering. If the market price of our shares of Common Stock after this Offering does not exceed the per share offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

We may not be able to satisfy the continued listing requirements of Nasdaq or maintain a listing of our Common Stock on Nasdaq.

If our Common Stock is listed on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing. If we violate Nasdaq’s listing requirements, or if we fail to meet any of Nasdaq’s listing standards, our Common Stock may be delisted. In addition, the Board may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our Common Stock from Nasdaq may materially impair our shareholders’ ability to buy and sell our Common Stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our Common Stock. The delisting of our Common Stock could significantly impair our ability to raise capital and the value of your investment.

There can be no assurance that a reverse stock split will result in a per share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our Common Stock may not necessarily improve.

We have considerable discretion as to the use of the net proceeds from this Offering and we may use these proceeds in ways with which you may not agree.

We intend to use the proceeds from this Offering for research and development, general working capital and other corporate purposes. However, we have considerable discretion in the application of the proceeds. Because of the number and variability of factors that will determine our use of our net proceeds from this Offering, their ultimate use may vary substantially from their currently intended use. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this Offering. The net proceeds may be used for corporate or other purposes with which you do not agree or that do not improve our profitability or increase our share price. The net proceeds from this Offering may also be placed in investments that do not produce income or that lose value. See “Use of Proceeds” below for more information.

You will experience immediate and substantial dilution as a result of this Offering.

As of June 30, 2023, our net tangible book value was approximately $(27.7) million or approximately $(4.45) per share. Since the effective price per share of our Common Stock being offered in this Offering is substantially higher than the net tangible book value per share of our Common Stock, you will suffer substantial dilution with respect to the net tangible book value of the Common Stock you purchase in this Offering. Based on the assumed public offering price of $5.00 per share of Common Stock being sold in this Offering, which is the midpoint of the estimated offering range set forth on the cover page of this prospectus, and our net tangible book value per share as of June 30, 2023, if you purchase shares of Common Stock in this Offering, you will suffer immediate and substantial dilution of $4.48 per share (or $4.26 per share, which is the midpoint of the range set forth on the cover page of this prospectus, if the underwriters exercise the over-allotment option in full) with respect to the net tangible book value of the Common Stock. In addition, the automatic conversion of all outstanding shares of our Series A Preferred Stock and Series A-1 Preferred Stock into 5,657,219 shares (not adjusted for the Common Stock Reverse Split) of our common stock in connection with the closing of this Offering will result in substantial dilution. See risk factor heading “Our need for capital will create additional risks and create potential substantial dilution to existing shareholders” and see the section titled “Dilution” for a more detailed discussion of the dilution you will incur if you purchase securities in this Offering.

The terms of our notes, and our debt repayment obligations thereunder, may restrict our ability to obtain additional financing, and adversely affect our financial condition and cash flows from operations in the future.

We have issued promissory notes payable to certain lenders which are due on demand. Though we have not received any demands as of the date of this prospectus and we expect these lenders to agree to extend payment deadlines to a date subsequent to the date of the closing of this Offering, there is no guarantee that this will occur. Our ability to meet our debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors, many of which are outside of our control. Our future operations may not generate sufficient cash to enable us to repay our debt, including the notes. If we fail to make a payment on our debt, we could be in default on such debt. If we are at any time unable to pay our indebtedness under the notes in cash when due, we may be required to issue additional shares of common stock on unfavorable terms.

We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business. Therefore, holders of our Common Stock will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.

If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our Common Stock could be negatively affected.

Any trading market for our Common Stock may be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our Common Stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage of us, the market price and market trading volume of our Common Stock could be negatively affected.

Future issuances of our Common Stock or securities convertible into, or exercisable or exchangeable for, our Common Stock, or the expiration of lock-up agreements that restrict the issuance of new Common Stock or the trading of outstanding Common Stock, could cause the market price of our Common Stock to decline and would result in the dilution of your holdings.

Future issuances of our Common Stock or securities convertible into, or exercisable or exchangeable for, our common stock, or the expiration of lock-up agreements that restrict the issuance of new Common Stock or the trading of outstanding Common Stock, could cause the market price of our Common Stock to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of our Common Stock. In all events, future issuances of our Common Stock would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our Common Stock. In connection with this Offering, we will enter into a lock-up agreement that prevents us, subject to certain exceptions, from offering additional shares of capital stock for up to six months after the closing of this Offering, as further described in the section titled “Underwriting.” In addition to any adverse effects that may arise upon the expiration of these lock-up agreements, the lock-up provisions in these agreements may be waived, at any time and without notice. If the restrictions under the lock-up agreements are waived, our Common Stock may become available for resale, subject to applicable law, including without notice, which could reduce the market price for our Common Stock.

Future issuances of debt securities, which would rank senior to our Common Stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our Common Stock.

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our Common Stock. Moreover, if we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of Common Stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our Common Stock must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our Common Stock.

We are authorized to issue “blank check” preferred stock without stockholder approval, which could adversely impact the rights of holders of our Common Stock.

Our articles of incorporation authorize us to issue up to 10,000,000 shares of preferred stock, of which 1,817,333 shares are designated as Series A preferred stock and 2,400,000 shares are designated as Series A-1 preferred stock. Any preferred stock that we issue in the future may rank ahead of our Common Stock in terms of dividend priority or liquidation premiums and may have greater voting rights than our Common Stock. In addition, such preferred stock may contain provisions allowing those shares to be converted into shares of Common Stock, which could dilute the value of Common Stock to current stockholders and could adversely affect the market price, if any, of our Common Stock. In addition, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of our Company.

If our shares of Common Stock become subject to the penny stock rules, it would become more difficult to trade our shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on Nasdaq or another national securities exchange and if the price of our Common Stock is less than $5.00, our Common Stock could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore shareholders may have difficulty selling their shares.

We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies and our shareholders could receive less information than they might expect to receive from more mature public companies.

Upon the completion of this Offering, we will be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not emerging growth companies, including but not limited to:

We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an emerging growth company for up to five years, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31.

Because we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our Common Stock less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our Common Stock.

Because we are a “smaller reporting company,” we may take advantage of certain scaled disclosures available to us, resulting in holders of our securities receiving less Company information than they would receive from a public company that is not a smaller reporting company.

We are a “smaller reporting company” as defined in the Exchange Act. As a smaller reporting company, we may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) our common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and our common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. To the extent we take advantage of any reduced disclosure obligations, it may make it harder for investors to analyze our results of operations and financial prospectus in comparison with other public companies.

As a smaller reporting company, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We have elected to adopt the accommodations available to smaller reporting companies. Until we cease to be a smaller reporting company, the scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies.

If investors consider our common stock less attractive as a result of our election to use the scaled-back disclosure permitted for smaller reporting companies, there may be a less active trading market for our common stock and our share price may be more volatile.

As a “smaller reporting company,” we may at some time in the future choose to exempt our Company from certain corporate governance requirements that could have an adverse effect on our public shareholders.

Under Nasdaq rules, a “smaller reporting company,” as defined in Rule 12b-2 under the Exchange Act, is not subject to certain corporate governance requirements otherwise applicable to companies listed on Nasdaq. For example, a smaller reporting company is exempt from the requirement of having a compensation committee composed solely of directors meeting certain enhanced independence standards, as long as the compensation committee has at least two members who do meet such standards. Although we have determined not to avail ourselves of this or other exemptions from Nasdaq requirements that are or may be afforded to smaller reporting companies while we will seek to maintain our shares on Nasdaq, in the future we may elect to rely on any or all of these exemptions. By electing to utilize any such exemptions, our Company may be subject to greater risks of poor corporate governance, poorer management decision-making processes, and reduced results of operations from problems in our corporate organization. Consequently, if we were to avail ourselves of these exemptions, our stock price might suffer, and there is no assurance that we would be able to continue to meet all continuing listing requirements of Nasdaq from which we would not be exempt, including minimum stock price requirements.

Based upon an assumed public offering price of $5 per Share, which is the midpoint of the range set forth on the cover page of this prospectus, we estimate that we will receive net proceeds from this Offering, after deducting the underwriting discounts and the estimated offering expenses payable by us, of approximately $9.18 million assuming the underwriter does not exercise its over-allotment option.

We plan to use the net proceeds we receive from this Offering for the following purposes:

We plan to use $790,000 of funds received from the Offering to finance pivotal clinical trials to treat DMG patients, and $250,000 to finance feasibility clinical trials to treat for serious pain and mental health conditions.

We believe that our existing cash and cash equivalents, together with interest on cash balances, will be sufficient to fund our operating expenses and capital expenditure requirements through at least the next 12 months. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this Offering. However, the nature, amounts and timing of our actual expenditures may vary significantly depending on numerous factors. As a result, our management has and will retain broad discretion over the allocation of the net proceeds from this Offering. We may find it necessary or advisable to use the net proceeds from this Offering for other purposes, and we will have broad discretion in the application of net proceeds from this Offering. To the extent that the net proceeds we receive from this Offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

We have not declared or paid any cash dividend on our Common Stock, and it currently intends to retain future earnings, if any, to finance the expansion of our business, and we do not expect to pay any cash dividends in the foreseeable future. The decision whether to pay cash dividends on our Common Stock will be made by the Board, in their sole discretion, and may take into account general and economic conditions, our available cash and current and anticipated cash needs, contractual, statutory and regulatory prohibitions and other restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as the Board. Our future ability to pay cash dividends on our Common Stock may also be limited by the terms of any future debt securities, preferred stock or credit facility.

You should read the information in the below table together with our consolidated financial statements and related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Use of Proceeds” included elsewhere in this prospectus. Historical share amounts are not adjusted for the Common Stock Reverse Split.

The table above is based on 6,215,279 shares of Common Stock outstanding as of June 30, 2023, and excludes, as of such date:

If you invest in this Offering, your ownership interest will be diluted to the extent of the difference between the offering price per share of our Common Stock and the as-adjusted net tangible book value per Share of our Common Stock immediately after the offering. Historical net tangible book value per Share represents the amount of our total tangible assets less total liabilities, divided by the number of Shares of our Common Stock outstanding.

The historical net tangible book value (deficit) of our Common Stock as of June 30, 2023, was approximately $(27.7 million) or $(4.45) per Share based upon shares of Common Stock outstanding on such date. Historical net tangible book value (deficit) per Share represents the amount of our total tangible assets reduced by the amount of our total liabilities, divided by the total number of shares of Common Stock outstanding. The pro forma historical net tangible book value (deficit) was $(3.33) per Share based upon shares of Common Stock outstanding as of June 30, 2023.

After giving effect to the sale of all of the 2,300,000 shares of Common Stock offered in this Offering at an assumed public offering price of $5 per Share, which is the midpoint of the range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses, including the conversion of $13,107 in debt and accrued interest, and factoring in the general release of $11,339 of deferred compensation and postemployment benefits effective at the time of offering, our pro forma as adjusted net tangible book value (deficit) as of June 30, 2023 would have been $7.2 million or $0.52 per Share. This represents an immediate increase in net tangible book value of $5.06 per Share to our existing stockholders, and an immediate dilution in net tangible book value of $4.48 per Share to new investors. The following table illustrates this per Share dilution:

The information discussed above is illustrative only, and the dilution information following this Offering will be adjusted based on the actual public offering price and other terms of this Offering determined at pricing. A $1.00 increase (decrease) in the assumed public offering price of $5.00 per Share, which is the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted net tangible book value by $0.28 per Share and increase the dilution to new investors by $0.72 per Share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase of 100,000 Shares would increase the pro forma as adjusted net tangible book value by $0.16 per Share and decrease the dilution to new investors by $0.16 per share, assuming the assumed public offering price of $5.00 per Share, which is the midpoint of the range set forth on the cover page of the prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

If the underwriters’ over-allotment option to purchase additional Shares is exercised in full, and based on the assumed public offering price of $5.00 per Share, which is the midpoint of the range set forth on the cover page of this prospectus, the pro forma as adjusted net tangible book value per share after this Offering would be $0.74 per Share, the increase in as adjusted net tangible book value per Share to existing stockholders would be $0.22 per Share and the dilution to new investors purchasing shares in this Offering would be $4.26 per share.

The number of shares of Common Stock outstanding is based on 6,215,279 shares of Common Stock issued and outstanding as of June 30, 2023, and excludes the following:

Except as otherwise indicated herein, all information in this prospectus assumes:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our audited financial statements and the related notes appearing at the end of this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Since our inception in 2002, we have invented, developed, and advanced our technology such that it will present potential alternative and improved methods of treatment for those suffering from serious diseases and conditions such as cancer, chronic and acute pain, and mental health maladies. Our technology is new in the medical industry. We believe the improved treatment modalities our technology provides are attractive to patients and the physicians treating them. Pharmaceutical and other entities desiring to treat underserved patient populations or improve currently available treatments for all patients will likely be interested in transacting with us to make our technology available for such purposes. Our operations and expenditures have been, and will continue to be, directed to these ends.

In the therapeutic area of oncology, we are pivotal trial-ready for the treatment of adult and pediatric brain cancers, and we have established a subsidiary, Cellsana Therapeutics, Inc., (“Cellsana”) to provide transactional and partnering flexibility in the oncology sector. Planned-for initiatives for continuing development include pivotal trials in treating GBM and DMG/DIPG.

Our ulRFE therapeutic system has potential treatment applications in a wide range of diseases other than cancer. We are conducting pre-clinical animal studies and collecting data from limited human exposures in the therapeutic areas of acute and chronic pain management and mental health and other CNS conditions. Our subsidiaries, Indolor Therapeutics, Inc. (“Indolor”) and Mensana Therapeutics, Inc. (“Mensana”), respectively, have been established to provide transactional and partnering flexibility in those sectors. Continuing development in these areas includes confirmatory pre-clinical studies and, later, clinical trials in treating acute and chronic pain and mental health conditions.

Since our inception, we have incurred significant operating losses. Our loss from operations was $6.9 million and $7.6 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, we had an accumulated deficit of $197.1 million. We expect to incur significant expenses and operating losses for the foreseeable future as we continue with our clinical trials and test new ways to utilize our technology to improve treatment methods.

As funding and resources allow, we will also continue our investigations into the therapeutic areas of animal health and ag-bio. We have proof of concept validation in each of those areas.

As we have done with Hapbee, we will look for opportunities to commercialize our technology in the non-medical space. Hapbee is already at the commercialization/revenue stage, and we believe we are capable of producing the same results with other companies.

With this Offering, we are seeking sufficient capital to enable us to continue the technology and business expansion already well underway. We believe proceeds from this Offering will be sufficient to fund our business plan for at least the next 12 months.

Our Board of Directors and stockholders have approved on August 2, 2023, and August 31, 2023, respectively, that prior to effectiveness of the registration statement of which this prospectus forms a part, we expect to effect a reverse stock split of our issued and outstanding shares of common stock at a ratio of 1 for 2.5. All common stock per share numbers and prices included herein have been adjusted to reflect the Common Stock Reverse Split, unless stated otherwise. In connection with the proposed Common Stock Reverse Split, the authorized shares of Common Stock were increased from 40,000,000 to 100,000,000 shares pursuant to the Articles of Amendment filed on February 16, 2023 with the State of Washington.

Our planned operating expenses consist of research, development, pre-clinical studies, clinical trials and general and administrative expenses. Personnel costs are a significant component for each category of operating expenses and consist of wages, benefits and bonuses. Personnel costs also include share-based compensation. We expect personnel costs to continue to increase as we hire new employees to continue to grow our business.

Our operations, research, development, pre-clinical and clinical trial activity is focused on advancing our technology through the pivotal trial stage for multiple tumor types, for pain management treatments, and for mental health treatment. Our activity will also focus on improving the delivery systems of our devices. Research, development, pre-clinical and clinical trials costs, including direct and allocated expenses, are expensed as incurred and consist primarily of the following: personnel costs (including share-based compensation) for those employees involved in our research, development, pre-clinical studies, clinical trials, regulatory and medical affairs activities; costs to conduct research, development, pre-clinical studies and clinical trial activity through agreements with contract research organizations and other third parties; facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies; manufacturing expenses associated with our medical device systems; and professional fees related to regulatory approvals.

General and administrative expenses consist primarily of personnel costs, professional fees and facilities costs. General and administrative personnel costs (including share-based compensation) include our executive, finance, human resources and legal functions. Our professional fees consist primarily of accounting, legal and other consulting costs. We expect that general and administrative expenses will increase in absolute dollars to support our growth. In addition, following the consummation of this Offering, we expect to incur significant additional legal and accounting costs related to compliance with SEC rules and regulations, including the additional costs of achieving and maintaining compliance with Section 404 of the Sarbanes-Oxley Act and compliance with Nasdaq rules, as well as additional insurance, investor relations and other costs associated with being a public company.

Our investment in Hapbee is valued each reporting period based on Hapbee’s stock price with the gain/(loss) flowing through non-operating income. While the fluctuation in the stock price does not impact our operating results, these changes do have a negative impact on our net income and earnings per share. For the years ended December 31, 2022 and 2021, and the six months ended June 30, 2023 and 2022, Hapbee stock fluctuations impacted net income $(5.8) million, $(8.1) million, $1.0 million, and $(4.8) million, respectively. Also, for the years ended December 31, 2022 and 2021, and the six months ended June 30, 2023 and 2022, Hapbee stock fluctuations impacted earnings per share $(0.95), $(1.47), $0.15, and $(0.81) respectively. In this regard, the stock price (expressed in Canadian dollars) has decreased from CAD$0.3 on December 31, 2021, to CAD$0.05 on December 31, 2022 to CAD$0.09 as of June 30, 2023.

Results of Operations for the Six Months Ended June 30, 2023 and June 30, 2022

Royalty revenues were $100 and $176 for the six months ended June 30, 2023 and 2022, respectively.

We had no license revenue in the six months ended June 30, 2023 and 2022. We expect license revenue to increase as Hapbee’s net income improves and as we enter into new licenses with Hapbee and other parties for our ulRFE signal technology.

Research and development costs increased approximately $157, or 95.7%, from approximately $164 for the six months ended June 30, 2022, to approximately $321 for the six months ended June 30, 2023, mainly because of an increase in lab expense for rent and related research activity. We expect research and development costs to increase as we grow, primarily due to efforts expended to accumulate necessary scientific data regarding our technology and our various business subsidiaries.

General and administrative costs decreased approximately $916, or 12.0%, from approximately $7,644 for the six months ended June 30, 2022, to approximately $6,728 for the six months ended June 30, 2023. The decrease is mostly due to a decrease in stock compensation expense of approximately $2,200 due to more options vesting during the six months ended June 30, 2022, offset against an increase in legal expenses of $500 and compensation of $733.

Unrealized gain(loss) on investment relate to our minority investment in Hapbee. For the six months ended June 30, 2023, we had a gain on investment of approximately $980 attributable to an increase in the market value of Hapbee.

Interest expense decreased approximately $366, or 26.3%, from approximately $1,393 for the six months ended June 30, 2022 to $1,027 for the six months ended June 30, 2023. The decrease is mostly related to $480 of warrant inducement expense that was recorded during the six months ended June 30, 2022. None was recorded during the six months ended June 30, 2023.

Results of Operations for the Years Ended December 31, 2022 and December 30, 2021

Royalty revenues were $294 and $221 for the years ended December 31, 2022 and 2021, respectively.

We had no license revenue in the year ended December 31, 2022, and license revenue was approximately $20 for the year ended December 31, 2021. We expect license revenue to increase as Hapbee’s net income improves and as we enter into new licenses with Hapbee and other parties for our ulRFE signal technology.

Research and development costs decreased approximately $878, or 57%, from approximately $1,536 for the year ended December 31, 2021, to approximately $658 for the year ended December 31, 2022, mainly because of an overall reduction in headcount and efficiencies gained through the use of contract research organizations and consultants. We expect research and development costs to increase as we grow, primarily due to efforts expended to accumulate necessary scientific data regarding our technology and our various business subsidiaries.

General and administrative costs increased approximately $3,557, or 35.5%, from approximately $10,033 for the year ended December 30, 2021, to approximately $13,590 for the year ended December 31, 2022. The increase is due to additional stock compensation expense related issuance of additional options during 2022. This increase was partially offset by significantly higher compensation in the year ended December 31, 2021.

Unrealized gain(loss) on investment related to our minority investment in Hapbee. For the year ended December 31, 2022, we had a loss on investment of approximately $5,800 attributable to a decline in the market value of Hapbee.

We recorded interest expense of approximately $2,200 for the year ended December 31, 2022, which is consistent with the $3,000 for the year ended December 31, 2021.

Our principal liquidity requirements are for research and development, working capital and capital expenditures. We fund our liquidity requirements primarily through cash on hand, cash flows from equity funding, borrowings. licensing fees and royalty receipts. As of June 30, 2023, we had cash on hand of approximately $163.

We believe the net proceeds from this Offering will be sufficient to fund our operation for at least the next 12 months. We have no definitive agreements or term sheets for any debt or equity financing at this time, and the timing and success of any additional financing is uncertain and not assured.

Additionally, we will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. Our management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act. This additional corporate governance time required of management could limit the amount of time our management has to implement our business plan and may delay our anticipated growth plans. We anticipate over the next 12 months the cost of being a reporting public company will be approximately $700.

The following table summarizes our cash flows from operating, investing, and financing activities:

Operating Activities – Cash used in operating activities primarily consisted of unrealized gain (loss) on investment, stock-based compensation and deferred compensation and post-employment benefits.

Financing Activities – Net cash provided by in financing activities primarily consisted of proceeds from the issuance of convertible notes in the aggregate principal amount of approximately $1.6 million for the six months ended June 30, 2023 and approximately $760 for the six months ended June 30, 2022. For the six months ended June 30, 2022, we also received approximately $500 from the issuance of related party promissory notes payable and $311 from the exercise of Common Stock purchase warrants.

Convertible Notes Conversion – Between January 2020 and December 2020, we issued 32 unsecured convertible notes with an aggregate principal amount of approximately $2,000. Between January 2021 and December 2021, we issued an additional 22 unsecured convertible notes with an aggregate principal amount of approximately $1,800. Between January 2022 and December 2022, we issued an additional 24 unsecured convertible notes in an aggregate principal amount of approximately $2,200. Between January and June 2023, 13 unsecured convertible notes were issued with an aggregate principal amount of approximately $1,825. All unconverted convertible notes have a maturity date of the earlier of August 15, 2023 (except for two notes totaling $201 due in August 2023) or consummation of a deemed liquidation and bear interest at an annual rate of 10%. During the year ended December 31, 2022, 30 convertible notes matured or were converted and resulted in a total of $1,952 in principal and accrued interest being converted into 184,939 shares of common stock under the amended conversion terms of the notes. The remaining convertible notes are set to convert on their maturity dates, all but two on September 29, 2023, and will convert their principal and accrued interested into Common Stock at a price of $10.23 per share.

The following table summarizes our cash flows from operating, investing, and financing activities:

Financing Activities – Net cash provided by financing activities primarily consisted of proceeds from the issuance of convertible notes in the aggregate principal amount of approximately $2,200, notes payable in the aggregate principal amount of approximately $1,400, and exercise of common stock warrants of approximately $300 for the year ended December 31, 2022, and approximately $1,900 from convertible notes, $200 from notes payable, $300 from a Small Business Administration loan, and $1,600 from common stock warrants for the year ended December 31, 2021.

We hold approximately 18.6% equity interest in Hapbee Technologies, Inc. (“Hapbee”). Royalty and license revenue received from Hapbee represented 100% of our revenue for the years ended December 31, 2022 and 2021. We are providing the summarized financial information for Hapbee due to our investment in Hapbee being deemed a significant equity investee as it comprised 62.6%, 45.7%, 86.4% of our total assets at June 30, 2023, December 31, 2022 and December 31, 2021, respectively.

The Hapbee financial statements were audited under Canadian Auditing Standards (CAS) using International Financial Reporting Standards (IFRS). Accordingly, Hapbee’s financial statements were not prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and are not directly comparable to financial statements prepared in accordance with U.S. GAAP. Hapbee meets the requirements of a “foreign issuer” under SEC rules and, as such, Hapbee is eligible to use financial statements prepared in accordance with CAS and IFRS in SEC filings. Dollar amounts in Hapbee’s financial statements are expressed in U.S. dollars.

The following information was derived from the Hapbee financial statements for the six months ended June 30, 2023. Information presented below is as of the most recent interim period publicly available.

The following information was derived from the Hapbee financial statements for the years ended December 31, 2021 and 2020.

Hapbee’s net loss decreased from $6.7 million for the year ended December 31, 2021 to $3.7 million for the year ended December 31, 2022. Material fluctuations causing this decrease are a decrease in cost of goods sold of $0.4 million, change in warrant liability of $0.7 million ($3.1 million gain in 2022 versus a $2.4 million gain in 2021), a reduction in shared-based compensation expense of $2.2 million, and a reduction in general and admin expenses of $0.6 million due to a decrease in headcount, offset by a $0.7 million increase in consulting expenses.

Hapbee’s revenues increased from $1.7 million during the year ended December 31, 2021 to $1.8 million during the year ended December 31, 2022. This increase is attributable primarily due to an increase in the number of devices sold during the year ended December 31, 2022, as compared to the year ended December 21, 2021. Cost of goods sold also dropped from $1.2 million to $0.9 million driven by efficiencies in the manufacturing process. As a result of the foregoing increase in revenues and reduction in cost of goods sold, Hapbee’s gross profit increased from $0.5 million during the year ended December 31, 2021 to $0.9 million during the year ended December 31, 2022. The increase in gross profit was mostly attributable to the decrease in cost of goods sold.

Hapbee’s net loss increased from $1.4 million for the six months ended June 30, 2022 to $1.9 million for the six months ended June 30, 2023. Material fluctuations causing this increase is a $3.4 million change in fair value of warrant liability offset against expense reductions in consulting expense of $1.4 million, general and administrative of $0.9 million, and share based compensation of $0.5 million.

Hapbee’s revenues decreased from $0.7 million during the six months ended June 30, 2022 to $0.5 million during the six months ended June 30, 2023. This decline is attributable primarily due to a decrease in the number of devices sold during the six months ended June 30, 2023, as compared to the six months ended June 30, 2022. However, Hapbee’s gross profit increased from $121 thousand during the six months ended June 30, 2022 to $136 thousand during the six months ended June 30, 2023. The increase in gross profit was mostly attributable to a reduction in cost of goods sold caused by efficiencies in the manufacturing process.

Due to ongoing substantial losses, and given the significant percentage of our balance sheet made up by the investment in Hapbee, we have evaluated Hapbee’s ability to continue as a going concern. Hapbee’s financial statements presented below are on a going concern basis. Hapbee’s ability to continue as a going concern is dependent upon Hapbee generating profitable operations in the future and, or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. We have been advised that there remains substantial doubt about the ability of Hapbee to continue as a going concern.

We prepare our financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the financial reporting period. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application.

The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates. We have considered the significant accounting policies described in the notes to our consolidated financial statements included elsewhere in this prospectus and concluded that none of our significant accounting policies constitute critical accounting policies.

There are no recently issued accounting pronouncements that we have not yet adopted that we believe are applicable or would have a material impact on our financial statements. For more information regarding recent accounting pronouncements, refer to Note 2(n) to our audited financial statements contained elsewhere in this prospectus.

We have not utilized any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not intend to hedge any existing or future borrowings and, consequently, we do not expect to be affected by changes in market interest rates. We do not currently have any sales or own assets and operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.

We are on a mission to advance the development and adoption of medical, health, and environmental applications of our low-to-ultra-low radio frequency energy technology once determined by the FDA (or other applicable regulators) to be safe and effective. We have invented and patented what we believe to be a groundbreaking technology that utilizes radio frequency energy (RFE) precisely targeted at the low and ultra-low ends of the RFE spectrum (ulRFE^®) to specifically regulate signaling and metabolic pathways on the molecular and genetic levels – without chemicals, radiation or drugs – delivered via a simple-to-use non-invasive therapeutic system. For example, using our proprietary technology, we derived a ulRFE signal from the well understood chemotherapy paclitaxel, which is known to have a particular effect on tumor cells by interrupting or significantly slowing the normal metabolic activity of cell division. Our clinical trials using the ulRFE signal of paclitaxel produced survival data (both median progression-free survival data and overall survival data) that are substantially similar to, or better than, historical survival data, based on FDA meta-analysis, for rGBM patients treated with best supportive care. The similarity of these results does not, in itself, show that the ulRFE signal of paclitaxel produces the same metabolic effect as paclitaxel: rGBM patients are not, as a standard, treated in a clinical setting with paclitaxel because the paclitaxel molecule cannot pass through the blood-brain barrier. This circumstance also prevents clinical trial investigators from performing blinded, controlled studies directly comparing (and measuring the statistical significance of) the effects of using the ulRFE signal of paclitaxel with the effects of using the paclitaxel molecule in treating rGBM patients. However, to establish the metabolic correlation between the paclitaxel drug and the ulRFE signal of paclitaxel, we examined the metabolic effect of the ulRFE signal of paclitaxel in pre-clinical in vitro polymerization studies using an a-cellular tubulin protein assay (the protein cells were extracted and purified from bovine brains). These studies showed that the paclitaxel-derived ulRFE signal alone (without the concomitant use of any other chemical or drug, and without the use of any other treatment intervention such as radiation) acts in the same or similar way to the paclitaxel drug upon tubulin (the protein component of microtubules within the cancer cell) simultaneously promoting the assembly and disassembly of microtubules to form stable, non-functioning microtubules, which in turn inhibits the mitotic activity of the cell, decreasing the cell’s disassembly function and in some cases leading to the death of the cancer cell (apoptosis). The shortening and lengthening of microtubules (termed dynamic instability) is necessary for their function as a transportation highway for the cell. Chromosomes, for example, rely upon this property of microtubules during mitosis, according to Drugbank Online.

Our ulRFE^® therapeutic system is an investigational non-invasive therapeutic medical device. It is the first of many potential product expressions of our underlying ulRFE platform technology. Our therapeutic medical device has potential treatment applications in a wide range of diseases, including cancer, acute and chronic pain management, mental health conditions, among others. Our therapeutic medical device is being investigated for the treatment of glioblastoma multiforme (GBM) brain tumors and diffuse midline glioma (DMG)/diffuse intrinsic pontine glioma (DIPG) brain tumors in human clinical trials.

Our corporate structure as of the date of this prospectus consists of our parent company with four presently non-operating subsidiaries.

In 2019, we created Hapbee Technologies, Inc. (Hapbee”), a Canadian company that is listed on the TSXV under the symbol “HAPB.” Since October 2020, Hapbee has utilized our ulRFE technology for the consumer wellness industry. As of December 31, 2022, we own approximately 18.6% of Hapbee making us Hapbee’s largest shareholder. Hapbee has licensed certain recorded ulRFE signals from us for use in its non-regulated, consumer-focused business.

Mensana Therapeutics, Inc. (“Mensana”), a Washington corporation established in November 2021, is our wholly-owned subsidiary that will use our ulRFE^®technology to develop and provide, subject to FDA approval, safe and effective therapies to those suffering from a variety of mental health conditions.

Indolor Therapeutics, Inc. (“Indolor”), a Washington corporation established in November 2021, is our wholly-owned subsidiary that will use our ulRFE technology to develop and provide, subject to FDA approval, safe and effective therapies to those suffering from serious acute and chronic pain conditions.

Cellsana Therapeutics, Inc. (“Cellsana”), a Washington corporation established in February 2022, is our wholly-owned subsidiary that will use our ulRFE technology to develop and provide, subject to FDA approval, safe and effective therapies to those suffering from cancer.

Zoesana Animal Health, Inc. (“Zoesana”), a Washington corporation established in June 2022, is our wholly-owned subsidiary that will use our ulRFE technology to develop and provide, subject to applicable regulatory approvals, safe and effective treatments to companion animals suffering from cancer and other serious diseases or conditions.

On October 8, 2022, the Board approved the mandatory conversion of all Series A-1 Preferred shares into common shares at the Voluntary Conversion Price (as defined in our Amended and Restated Articles of Incorporation) equal to $4.6875 upon consummation of this Offering. Accordingly, each Series A-1 Preferred shareholder will be deemed to have exercised his or her option pursuant to Section 2(c)(i)(B) of our Amended and Restated Articles of Incorporation to convert all of his, her or its Series A-1 Preferred shares at the Voluntary Conversion Price upon consummation of this Offering.

We are developing treatments for multiple disease areas that affect human health. We currently expect to participate and compete in the oncology treatment industry, the pain management industry, and the mental health treatment industry.

The Optune product of Novocure GmbH is the only medical device and therapy on the market today that is comparable to our ulRFE investigational therapeutic device for treating GBM brain cancer by focusing on limiting cancer cell division. However, Optune uses a markedly different technology: it works by applying a voltage gradient across two electrodes and altering the polarity of the electrodes at a fixed frequency. The Optune device generates heat along with electrical energy. Use of the Optune device requires shaving the head, applying adhesive electrodes to the scalp (which must be frequently re-positioned), carrying a 2.7-pound battery pack, and changing the battery every eight hours. A backpack, housing the battery, is required to be worn continuously while upright.

The technology and form factor of our therapeutic device is designed to limit cancer cell division through the use of specific low and ultra-low radiofrequency energy signals that emulate the therapeutic effects and method of action of proven drugs (the paclitaxel chemotherapy for GBM treatment); our device has no thermal (heating) or ionizing effects; it is extremely lightweight (3-ounce battery/controller), is portable without a backpack, has a 12 to 16 hour battery life, and can be used without shaving the head.

We have no known competitors in treating DMG/DIPG brain cancer since treatments available in the market are not effective.

We may also compete with other medical device products that have come to market or may come to the oncology market in the future, though we are unaware of any such competitors at this time.

Mental Health issues are significantly on the rise. There are high failure rates in treating patients for PTSD, ADHD, anxiety and depression. CNS Spectrums and suicide rates are unacceptably high. Patients experience better outcomes in treatments combining psychiatric therapy with psychedelic drugs.

The market for drugs treating mental health conditions is included in the market for CNS drugs. The global CNS drugs market is expected to grow from $123.4 billion in 2019 to reach $160.4 billion in 2023. The global CNS therapeutic market is expected to reach $128.9 billion by 2025.

Our technology presents competitive benefits for the treatment of mental health conditions:

We know of one FDA-approved medical device that would compete with our investigational device, if approved, in the pain management sector, but its application is very limited and it does not use, or provide the potential benefits of, our ulRFE technology. IB-Stim (formerly Neuro-Stim) is a percutaneous nerve stimulator intended for use as an adjunct in the treatment of a single abdominal pain indication in adolescent patients with irritable bowel syndrome (IBS). It does not claim to treat multiple pain pathways, as our product is intended to do, if approved. Unlike the IB-Stim device, which for use must penetrate the skin, our therapeutic device is completely non-invasive (as well as being non-thermal, non-sterile, and non-ionizing).

NeoRhythm markets a pulsed electromagnetic field device claiming to entrain the brain into five different brainwave states – which they call gamma, beta, alpha, theta, delta – one of which states is purported to stimulate areas that produce pain reducing hormones such as endorphins and serotonin. NeoRhythm does not claim to directly affect cellular activity in the same or similar way to proven drugs and biologics, as our product is designed to do.

There are also certain transcutaneous electrical nerve stimulation (TENS) products, which are not FDA-approved, being used for pain mitigation in arthritis and other autoimmune cases. Unlike our device, these products must penetrate the skin. One such device is marketed by Neurosoft. None of the TENS manufacturers claims that the product emulates the method of action of approved drugs, as our device is designed to do.

In addition, Hapbee’s consumer products face direct and indirect competition from a variety of players including firms engaged in the wearables industry such as Oura Ring, Halo Neurosciences, Muse, NeoRhythm and Calm, as well as software applications that claim to produce benefits like those of wellness products. The table is a comparison of Hapbee and its competitors.

We believe that the following competitive strengths will enable us to compete effectively:

Moreover, when it comes to the use of our technology for treating GBM, our therapeutic medical device has strong potential market advantages when compared to Optune. As illustrated in the graphic above, it features:

Our ulRFE investigational technology has demonstrated potential application(s) in multiple indications including oncology, pain management, mental health, animal health, ag-biotechnology and consumer markets. We are at varying stages of development with GBM and DMG devices and is ready to initiate pivotal (phase 3) human trials after obtaining approval of IDEs from the FDA. We have established other companies to develop the markets for our technology.

We formed our wholly-owned subsidiary, Cellsana, to develop the use of our technology in the oncology market. Cellsana is ready to proceed with a DMG/DIPG pivotal trial and a GBM pivotal trial. We have also partnered with companies in Japan (Teijin Pharma) and India (Sayre) to market, sell and distribute devices following regulatory clearance.

We formed two wholly-owned subsidiaries, Indolor and Mensana, to develop the use of our technology in the pain relief and mental health markets, respectively. Initial animal safety and effectiveness studies have demonstrated promising effects, and both companies are ready to proceed to human clinical trials to collect data to submit to the FDA for a determination of safety and effectiveness.

We also formed our wholly-owned subsidiary, Zoesana, to develop the use of our technology in the animal health markets, focusing primarily on treatment of cancer and pain conditions. Initial animal safety and effectiveness studies have demonstrated promising effects, and Zoesana is ready to perform further studies to collect data to submit to the FDA for a determination of safety and effectiveness in treating various indications.

Hapbee is a company established by EMulate, to deliver and commercialize a licensed subset of our signal catalog to users in the non-medical consumer space. EMulate receives license fees and royalties from the sale of devices and subscriptions to the Hapbee services.

The effectiveness of our ulRFE signal technology has been demonstrated in two other sectors to date: animal health and agriculture. Business opportunities are or will be available in these and other market areas.

Radiofrequency energy (RFE) is an oscillating form of magnetic or electromagnetic radiation that transfers energy by radio waves. Oscillating magnetic fields can impact cellular dynamics through the forcing of ions. The literature establishes that low and ultra-low RFE fields (0 Hz to 30 kHz) (Figure 1) are bioactive, exerting their effects by forced-vibration of all the free ions on the cell surface. A magnetic field can alter the behavior of a cell membrane channel and affect calcium movement into the cell, which may influence the cell’s physiology. Oscillating magnetic fields could also change the binding properties of specific proteins, and alter nitric oxide and reactive oxygen species, which are critical regulators of essential physiological pathways, resulting in specific phenotypic changes.

Our patented RFE technology is targeted at the low and ultra-low ends of the RFE spectrum (ulRFE^®) – 0 Hz to 22 kHz. Numerous pre-clinical and human studies consistently demonstrate the ability to emulate the biological activity (with specificity) of a broad range of molecules such as drugs, siRNA molecules as well as hormones.

Figure 1. Radio Frequency Energy (RFE): Electrostatic potential of molecules in motion. Our platform uses ulRFE of the low and ultra-low wavelength ranges (less than 22 kHz) of the spectrum to emit signals that emulate phenotypic changes produced by proven drugs.

We have developed the technology to measure and record the electromagnetic emission of molecules that are suspended in a liquid solvent, such as water. This proprietary RFE-based platform is designed to emulate the therapeutic effect of drugs. Our technology is broadly divided into two sectors: 1) signal acquisition and 2) signal delivery. The Molecular Interrogation and Data Systems (MIDS; see Diagram of MIDS below) is a shielded environment that blocks the external electromagnetic (EM) spectrum from 0 kHz (DC) to 300 MHz wavelengths, reducing the external environmental electromagnetic power by -80 to -120 dB (frequency dependent power reduction). Molecular signals are obtained from solvated molecules using a direct-current Superconducting Quantum Interference Device (SQUID), an extremely sensitive magnetometer (listening) technology, originally developed by the U.S. military, coupled to a second derivative gradiometer operating in this highly shielded electromagnetic environment. The SQUID technology measures the electrostatic potential of solvated molecules and is designed to be applicable to most non-covalent proven drugs, including e.g. siRNA molecules, to downregulate target proteins, and endogenous chemicals, such as hormones. The signals are recorded, analyzed, and digitized for testing in pre-clinical studies. Transduction of precise ulRFE profiles into biological systems have been shown to produce precise biological responses. Thus, transduction of these signals, when emitted via our proprietary controller and head coil system, is hypothesized to interact with charges on proteins and induce selective electron movement and charge transfer, or charge redistribution in a defined bioactive target, resulting in altered cell dynamics that produce relevant phenotypic changes and therapeutic effects.

The process from signal molecule identification to validated pre-clinical safety and effectiveness readout (using contract research organizations for testing) takes six to twelve months and costs $250,000 to $500,000.

Our disruptive platform technology captures the electromagnetic capability of molecules to affect biological systems as illustrated below.

Our ulRFE^® therapeutic system is a non-invasive investigational medical device. It is the first of many product expressions of our underlying ulRFE platform technology. There is no work required to complete the device, which has been used in GBM clinical trials since 2018 and in DMG compassionate use studies since 2018. Showing promise in pre-clinical studies and clinical trials, our therapeutic system has potential treatment applications in a wide range of diseases, including cancer, acute and chronic (inflammatory) pain, CNS and mental health conditions, among others. We may modify the configuration of the antenna portion of our therapeutic medical device for treatment application at the part of the body at which the indication (cancer, pain) mainly presents, but no changes will be necessary to parts of the device associated with the transmission of ulRFE to the antenna portion.

Our therapeutic medical device is already being evaluated for the treatment of GBM brain tumors and DMG/DIPG brain tumors in human clinical trials.

Our therapeutic medical device is ready for pivotal trial for DMG and GBM. In addition, we are preparing for human clinical trials in acute and chronic pain and multiple mental health indications. Evaluation of our medical device in treating other serious disease indications are planned to follow.

Validated data from pre-clinical animal models and first in human exposures support a potential safety profile and potential effectiveness in the following:

Our products for pain management are designed to target the treatment of “pain pathways” broadly categorized in the industry as follows: acute, chronic, neuropathic, inflammatory and visceral. These five broad categories can overlap with one another, as part of a disease or injury progression.

Traditional pain management focuses on the use of non-steroidal anti-inflammatory drugs (NSAIDs) that target the COX1/2 enzymes to regulate prostaglandin production for inflammatory pain (late acute and chronic).

Cannabidiol (CBD) and its derivatives work across a broad range of pain sensation as modulators of pain. In specific cases, CBD has shown excellent efficacy as an anti-nausea medication. Although nausea is not strictly a pain indication, nausea is adjacent and correlated to pain. CBD has been shown to modulate pain sensation across all five pain categories.

Visceral pain is mostly associated with post-surgical, renal, cardiac, bone breaks/injuries, hepatic and bowel injuries or diseases, that are due to different etiologies. Opioids are frontline pain control medications, usually coupled with NSAIDs, to reduce or modulate severe pain.

Neuropathic pain is associated with nerve injury, stemming from diabetes, nerve crush/pinch and neurodegenerative conditions. Neuropathic pain is a chronic condition that produces variable intensities of pain.

Our investigational therapeutic device’s safety and effectiveness tests have been performed on animal models and have demonstrated that the technology can emulate the effects of the conventional drug treatments for each of the pain pathways described above. Subject to receiving requisite regulatory approvals, we intend to use the specific ulRFE signals produced by our device to treat patients suffering from these pain conditions.

Hapbee developed a new form factor utilizing Bluetooth low energy (BLE) to connect to a phone and our proprietary ulRFE technology to deliver both individual signals and signal blends. Signals and blends are derived from compounds that help with sleep, focus, and other wellness sensations. This product can be worn on either the consumer’s head, around the neck or placed under the consumer’s pillow for sleep. It costs approximately $299-$399 per unit and a recurring subscription between $19 and $40 per month for limited or all-access membership. Hapbee’s sales model for selling a basic product accompanied by monthly subscriptions is often referred to in the consumer products industry as a “razor/razor blade” model. Hapbee’s smart sleep pad product began shipping in 2022 and face mask product is in beta testing.

A working prototype of the Hapbee Wearable Wellness Product was completed in September 2019.

The Hapbee Wearable Wellness Product weighs 4.5 ounces and comes with a USB-C charging and holding cradle that allows the headband to stand upright as it charges. It is designed to have eight hours of battery life for each charge. The lightweight and low-profile design of the Hapbee Wearable Wellness Product allows users to wear the product comfortably on their heads, over the brim of a hat, or discreetly around their collars under their shirts.

The Hapbee Wearable Wellness Product allows wearers to choose how they feel by producing a variety of sensations by “playing” signals emitting precise electromagnetic fields. The sensations fall under several broad categories such as: Happy, Alert, Relax, Calm, Sleepy, and Focus. The product connects to and is controlled by the customizable Hapbee App that is available for both iOS and Android compatible smartphones.

All of the Hapbee’s signals have been tested and confirmed to fall below the applicable International Commission on Non-Ionizing Radiation Protection’s safe exposure guidelines for low-frequency magnetic fields.

Bennett M. (Mike) Butters is one of our co-founders and principal inventor of Hapbee’s technology. Mr. Butters performed the measurement of the magnetic field of the Hapbee Wearable Wellness Products.

In addition to its Wearable Wellness Product, Hapbee has developed a “smart sleep pad,” which is ready for shipping to wholesale customers on a trial-sales basis and is developing a face mask product that is in beta testing, intended primarily for use while sleeping. Hapbee also has developed or is in the process of developing multiple OEM relationships.

The Hapbee App currently has over 2,051 unique builds and updates and has been launched commercially.

The signals themselves, which are played on the Hapbee Wearable Wellness Products, are security protected using encryption standards such as AES 128-bit song encryption keys, 128-bit device communication encryption keys and 2048 key length using RSA and ECDSA encryption providers on Hapbee’s server resources. Signals, which are sometimes metaphorically referred to as “songs” because of the large volume of electromagnetic data points of molecules recorded when ulRFE signals are created and because they are transmitted from a WAV file as is often used for digital music recordings, are transferred via Secure HTTPS to our secure server hosted by Microsoft Azure to distribute to users via the Hapbee App and transferred to each product using a secure device key determined by the manufacturer (over the BLE frequency).

Hapbee has also developed a protective song encryption tool for enhanced software security. Hapbee will be able to encrypt songs using the specifications of our product, and there is no reliance on a third-party vendor to create updates, nor are there security violations inside the encryption tool that would compromise the product. The utility for song encryption uses Microsoft.NET Framework and Windows Desktop Platform to ensure the highest security. Subscriber data, which includes basic contact information, is encrypted and saved on Hapbee’s secure server.

In addition to platform security protection though encryption protocols, which protect the loading and playing of the signals through the Hapbee App onto the Hapbee Wearable Wellness Products, the product is also sealed through sonic welding, and if broken open or tampered with, the product and embedded signals are rendered useless.

The Hapbee App will allow Hapbee to collect trends on user habits including time of day plays, duration, and other demographics. The Hapbee App will also give Hapbee the opportunity to cobrand and release new signals with other companies for products such as VR, float pod, pillow and mattress companies.

The Hapbee App stores all available predictable electromagnetic signals on a “playlist” that can be accessed via a monthly subscription which is priced according to the features included. Currently, signals can be added, updated and removed on the fly, and the app can specify suggested play time on a per signal basis. The Hapbee App launched with six signals that fall in the broad categories: Happy, Alert, Calm, Relax, Sleepy, Focus, and two more signal categories have since been added. As of July 2021, there were eight signals available related to performance, sleep, and memory function, for use single form or in combination blends available on the Hapbee App Hapbee is evaluating additional signals to potentially license from us.

Hapbee has two primary sources of revenue: sale of Hapbee Wearable Wellness Products and subscriptions to use all of the signals in the Hapbee App. Hapbee sells its Hapbee Wearable Wellness Products both on its website and through third party resellers. The price on the website is $299 for the headband or neck-wearable product and $259 for the smart sleeping pad product.

Each customer gets a free trial period in the Hapbee App for unlimited use of certain signals, and then they pay between $19 and $40 per month as a subscription fee for limited or unlimited use of all signals. If customers do not wish to continue paying for the monthly membership, they are still allowed to use one signal a month unlimited, and the monthly free signal will rotate. As of the date of this prospectus, Hapbee has over 3,300 all-access members.

On October 26, 2020, April 21, 2021 and July 29, 2021, we entered into four Exclusive License Agreements, as amended (the “Exclusive License Agreements”) with Hapbee to grant Hapbee certain exclusive, royalty-bearing rights and licenses to develop, use, import, and commercialize products using patents, know-how, and other intellectual property relating to our proprietary ulRFE technology (the “Authorized Products”). The Authorized Products are for recreational and/or non-medical use in humans. We also granted Hapbee a non-exclusive, royalty-free license under our Trademarks related to the Authorized Products, including ulRFE^®.

Under the Exclusive License Agreements, Hapbee granted us a royalty-free, fully-paid, perpetual, irrevocable, non-exclusive license, with the right to grant sublicenses, to and under all Hapbee’s know-how, all patents that claim inventions that relate to the Authorized Products, and Hapbee’s interests in the patents claiming inventions discovered, conceived or reduced to practice jointly by or on behalf Hapbee, on the one hand, and by or on our behalf, on the other hand (Joint Inventions), and know-how included in Joint Inventions.

Pursuant to the Exclusive License Agreements, Hapbee is solely responsible for commercializing the Authorized Products and should use commercially reasonable efforts to achieve the first commercial sale within six months after the effective date of the Exclusive License Agreements, and such six-month period may be extended by written consent.

In consideration for the licenses and rights granted to Hapbee, Hapbee agreed to pay us, within 10 days following the effective date of each Exclusive License Agreements, a payment in the amount of $10,000.

In further consideration for the licenses and rights granted to Hapbee, Hapbee agreed to pay us, on a calendar quarter basis, royalties on the quarterly net income from sales, lease, or rental of the Authorized Products worldwide multiplied by the percentage royalty rate equal to 20%, and use of Authorized Products worldwide multiplied by the percentage royalty rate equal to 20%; provided, that the percentage royalty rate on the first $10 million of net income form use of Authorized Products will be equal to 25%.

The terms of the Exclusive License Agreements are 20 years from the effective date of each Exclusive License Agreement. The Exclusive License Agreements may be terminated by mutual written agreements or material breach.

Targeting Immuno-oncology targets (CTLA-4 and PD-1) Proof of Concept studies conducted at the University of California at San Diego from December 2013 to May 2014, without any involvement or participation by us, looked at the effects of tumor growth on a GBM model in mice (U-87 MG), and at targeting tumor growth via the downregulating of the CTLA-4 and PD1 (A2 signal, right graph) immune checkpoint inhibitor genes using the recordings of siRNA targeting the murine versions of the human genes played sequentially while exposing mice to the A2 magnetic field against a murine GL261 tumor cell line. Tumor growth in both models was reduced to a statistically significant degree when compared to the control mice (exposed to a white noise signal). The immuno-oncology proof of concept study synopses are as follows:

The specificity of the biologic activity produced by ulRFE was demonstrated in experiments conducted, without any involvement or participation by us, by independent labs from June 2016 to January 2017 (Charles Cobbs, Swedish Neuroscience Institute; J Neurooncol (2017) 133:257–264, DOI 10.1007/s11060-017-2440-x) targeting the epidermal growth factor receptor EGFR on glioblastoma cell line U-87 MG. A recording of a small interfering RNA (siRNA) targeting human EGFR was tested in vitro at 48 and 72 hours. EGFR inhibition by specific ulRFE reduced the level of EGFR protein by 27% and 73%, respectively. These data indicate that certain ulRFE can inhibit gene expression at the transcriptional and protein levels, similar to what is observed with physical small interfering RNA (siRNA) inhibition. Specific EGFR knockdown effect was detected in U-87 MG cells treated with ulRFE using an 80 gene PCR-based array.

The results of in-vivo studies conducted in four phases at the University of California at San Francisco during the period November 2015 to December 2016, without any involvement or participation by us, demonstrated that the technology is flexible enough to record very different molecules to target specific pathways and the data is in preparation for publication. As a result, median survival was increased in the EGFR RFE group, and histology showed significant reduction in EGFR expression.

Small inhibitor RNA (siRNA) ulRFE directed against EGFR in a xenograft model of a human glioblastoma cell line (U-87 MG).

A study by the laboratory of Dr. Todd Mockler at the Donald Danforth Plant Science Center using ulRFE derived from siRNA against MAA7 (tryptophan synthase beta) showed a decrease in mRNA levels for MAA7 in, clearly demonstrating an effect in MAA7, as well as in the genes regulated by MAA7 expression (a gene ontology expression map). In cells exposed to the ulRFE, an increase in cell growth was observed as compared to no ulRFE.

We have sponsored three clinical trials of our investigational device in GBM: Study NAT-101 in the continental United States for recurrent GBM patients, Study NAT-105 in Australia for recurrent GBM patients, and Study NAT-109 in the continental United States for newly diagnosed GBM patients.

The table below shows historical data based on FDA meta-analysis and current Optune labeling for progression-free survival (PFS) and overall survival (OS) in rGBM. We have included in this table data for our therapeutic device (sometimes called “Voyager”) from Studies NAT-101 and NAT-105.

The following bar charts* show our therapeutic device’s clinical effect in recurrent GBM in Study NAT-101 compared to the data from FDA’s meta-analysis and the Optune labeling.

*These bar charts are not meant to represent head-to-head results. Comparing the results from different trials may be unreliable due to different protocol designs, trial designs, patient selection and populations, number of patients, trial endpoints, trial objectives and other parameters that may not be the same between trials. Therefore, cross-study comparisons provide very limited information about the effectiveness of a therapeutic.

Our NAT-101 GBM trial was conducted in rGBM patients in the United States. Our GBM clinical trial was conducted at the trial sites by the investigators identified below. The trial’s first and second cohorts enrolled the first patient on February 11, 2015 and completed the last patient visit on January 31, 2018 with 75 patients enrolled and treated. Patients were eligible to participate in the study if they had a histologically-confirmed diagnosis of GBM, had prior radiotherapy and temozolomide chemotherapy, had progressive disease with at least one measurable lesion on MRI or CT, were at least 18 years of age, had a KPS score ≥ 60, had adequate organ and marrow function, and provided signed, informed consent. Patients with recurrent GBM were treated with Voyager as monotherapy or in combination with standard-of-care chemotherapy or immunotherapy at the Investigator’s discretion. Treatment with the investigational device was administered continuously (i.e., 24/7) until unequivocal disease progression, occurrence of a device-related clinically significant adverse event, unacceptable adverse reactions, or withdrawal of informed consent. At the discretion of the Investigator, patients could remain on treatment post-progression, and to date, in most cases patients experiencing progression have remained on treatment. Patient visits occurred at least every 8 weeks during the first 6 months and every 4 months thereafter. Routine hematology and chemistry assessments, physical exam (including vital signs and neurological exam), and MRI were performed at baseline and at each visit. Safety was assessed by incidence of adverse events associated with the therapeutic device, as well as trends in clinical laboratory parameters, vital signs, and physical exams. Patients were followed until death. There were no clinically significant changes on physical exams (including changes in vital signs and neurological exams) or in laboratory findings, and no device-related serious adverse events were reported. Clinical utility was assessed via standard calculation of overall survival and progression-free survival. The study was designed to observe at least a 25% response rate (suggesting active therapy) in patients with first or second recurrence. The study did not prespecify any statistical comparisons; however, the data suggest a clinically meaningful benefit in overall survival and progression-free survival as compared to historical control data.

The results in NAT-101 indicated that overall survival in patients with recurrent GBM was approximately 10 months in patients treated with our therapeutic device combined with best supportive care, which consists of appropriate palliative care without any other anticancer therapies. We believe the results are clinically meaningful as compared with historical performance of Overall Survival of approximately 7 months in patients treated with commonly used pharmaceutical treatments (Active Tx). These Active Tx demonstrated effectiveness in historical clinical trials while the therapies identified as Inactive Tx demonstrated no effectiveness in historical clinical trials. In addition, patients with recurrent GBM using our therapeutic device without other treatment (monotherapy) survived 7 months (median), which is consistent for patients using Active Tx (e.g., chemotherapy), but with many fewer side effects attributable to the treatment product. We believe that this is the first potential improvement in recurrent GBM survival in decades.

Pre-clinical, observational tests also indicate a potential for use of ulRFE^® in a therapeutic setting. The results in human observation tests are as follows:

Our next steps will be to design clinical trials to be initiated in the second half of 2023 or in the first half of 2024 and multiple sites have been identified for phase 1 to 2 in the CNS space.

Pre-clinical data confirm activity in validated pain management models. ANS Biotech, a pre-clinical CRO known for its expertise in validated pain animal models, conducted an independent study using ten validated animal pain models to assess the effects of eight different ulRFE signals in comparison to known “gold standard” pain drugs. ANS’s final report provides detailed data on all animal data in pain study completed June 2021 that shows the following:

The internal reference drugs are morphine, (-) U-50/488H, duloxetine and indomethacin. All three drugs are internal reference drugs against which the relative effects of new therapies are measured.

The above-mentioned study results were further confirmed by ANS’s assays as indicated in the chart below (N=10 rats per exposure group). In the assays, five different pain models: Carrageenan: Inflammatory pain model, Oxaliplatin: Neuropathic pain model, TNBS: Visceral pain model, Acetic acid: Acute pain model, and Bennett paw pressure: Surgical pain model were assessed, three of which were significant. Six ulRFE signals were tested in the assays, including fentanyl, hydromorphone, CBD, dexamethasone, indomethacin and naproxen. All assays were assessed with N=10 per signal group, which means technicians were blinded to the type of signal used, error bars are standard error of the mean (S.E.M.) and were powered for statistical analysis.

The following human feasibility data further support the effectiveness of our pain relief technology.

We are currently working with key opinion leaders to design clinical trials, selecting indications and endpoints.

ulRFE has been tested in over 300 dogs (pets) with naturally occurring malignancies by Dr. Greg Ogilvie (Angel Care Cancer Center, southern California; data on file). Interim review of the first 200 pets observed partial responses and complete responses in over 20 different solid, non-brain tumor types. No clinically important or significant toxicities (Grade 3 or 4) were observed.

Canine open label trial results for using our ulRFE^®on companion animals’ oncology are as follows:

Experiments in the agricultural/botanical sector were done in collaboration with the Donald Danforth Plant Sciences Center, assessing the gene-regulating ability of a plant growth hormone (agrin), the effects of a recorded signal of agrin and the outcomes of a siRNA against a highly conserved chlorophyl gene. A gene ontology screen, comparing physically treated plant and untreated plant to ulRFE-treated plants, demonstrated that the overlap in gene expression and gene suppression reached a statistically significant level (P < 0.0001) in overlap for both the agrin signal and the siRNA signal directed against a chlorophyl plant gene (data on file).

Initial rodent studies conducted at Crown Bio, an independent contract research organization (CRO) for Hapbee, demonstrated behavioral changes in mice that were exposed to oscillating magnetic fields derived from chemistries intended to either stimulate or suppress moods and sensations (e.g., caffeine, nicotine, melatonin, CBD, THC and alcohol). Under controlled and blinded conditions, independent evaluators noted the mice reacting to the specific ulRFE in a manner consistent with reactions expected from using the compound from which the ulRFE was derived (Figure 4).

These ulRFE signals are now part of the Hapbee catalog of products that are in the non-medical, commercial market space (Hapbee.com), which launched its first product to customers in late 2020.

Our platform technology provides us with multiple marketing opportunities. We can ascertain the market-readiness of any particular molecular signal within six to twelve months following molecule identification, all at a relatively low cost. These advantages make a technology licensing model possible for us and attractive to prospective licensees. The licensee is able to receive an early readout of a drug-candidate’s effectiveness by using the signal of the drug, produced by our medical device, in pre-clinical models. Moreover, the licensee can use a drug signal to determine at the pre-clinical stage whether additional investment in pre-clinical and clinical trials is warranted.

Under this model, we would develop a molecular signal, often at the request of a drug company, evaluate the signal preliminarily for safety and effectiveness, usually in animal models, then license the drug signal to the interested drug company. The prospective licensee would pay for such evaluation, and licenses would produce revenues in the form of up-front fees, milestone fees, and continuing royalties. Before a drug signal licensee will be able to commercialize a treatment using the ulRFE derived from the specified drug, the licensee will need to have the ulRFE^®therapeutic system delivering the specified drug signal evaluated by the FDA, at the licensee’s expense but with our assistance (paid for by the licensee), probably as a Class III medical device requiring approval of a PMA (or potentially an HDE). The amount of fees and royalties we receive from any prospective licensee will depend in part on how far along in the FDA evaluation process the specified drug signal and delivery device are at the time of licensing: the amount of effort and money we expend in developing, testing, and advancing the regulatory process for a particular ulRFE system prior to licensing will be proportionately reflected in the amount of fees and royalties we would expect to receive from the licensee.

Our strategy for marketing treatments for rare indications is different. For example, DMG/DIPG, for which we are currently developing our therapeutic device and intend to seek HDE approval from the FDA and PMA approval after completion of a pivotal clinical trial, is such a rare disease indication – about 150 to 300 new cases are diagnosed per year in the U.S. Rare disease indications are often underserved or not served at all by the medical industry because the cost for developing treatments, as compared with the revenues that could be earned from relatively few cases, is viewed as prohibitive. Our low costs to develop ulRFE signal treatments avoid such a financial result. Our business plans would include marketing ulRFE treatments for rare diseases by ourselves to doctors and patients in the United States; the relatively small sales and marketing force needed to do so makes this a viable option. Outside the United States, we would contract for the distribution of therapeutic signal products with a company or agency in the non-U.S. jurisdiction, which would be more familiar and capable of efficiently complying with local regulation. We have used this model as a basis for entering into an agreement with Sayre in India for the distribution of devices to treat GBM and DMG/DIPG.

We have third-party validation from regional strategic partners for treatment of brain cancer. We granted Teijin Pharma, a large Japanese pharmaceutical company, a license to use our ulRFE technology for treating GBM patients in the territory of Japan. We granted Sayre Therapeutics Pvt Ltd (Sayre Pharma), an Indian company, distribution rights to use our ulRFE technology for treating GBM patients and DMG patients in the 29 States and Union Territories of India.

Our affiliates and subsidiaries, Mensana, Indolor, Cellsana and Zoesana, together with our licensee, Hapbee, provide us with investors, strategic targeted investment, and partnering opportunities.

Multiple studies in a variety of systems confirm that magnetic fields can alter biological function. Therapeutically useful devices are or have been used presently in clinical practice, both in human and veterinary medicine. Treatment for bone growth, wound healing, arthritis pain and depression are among the clinical uses. Research aims to understand better how these magnetic fields produce their effects to further enable new and exciting therapeutic options for many diseases.

In multiple pre-clinical animal and agriculture models and in-human clinical studies, we observed that specific ulRFE demonstrates a measurable, objective and specific biological change. The magnetic fields generated by our ulRFE point to the flexibility and specificity of the technology. Feasibility (phase 1 and phase 2) clinical trials in GBM and a compassionate use clinical trial in DMG/DIPG have produced promising safety data and preliminary and encouraging effectiveness data in overall survival. Pre-clinical in vitro assays have demonstrated the ability to selectively reduce mRNA and protein expression in cell-culture for EGFR and in immuno- oncology targets. ulRFE derived from known pain inhibiting compounds have resulted in measurable reduction in pain scales in validated and objective pain models. Encouraging pre-clinical results in mental health models suggest that specific ulRFE may be able to help treat patients suffering from anxiety, depression, PTSD and other mental health conditions.

Our technology has a broad range of potential applications in multiple areas of human and animal health conditions and may offer significant benefits over current treatments for many patients.

We have comprehensive, integrated pre-clinical and clinical proof of concept (PoC), including the paclitaxel signal, which is active in human GBM, DMG and 20+ canine tumor types, and additional targets with published activity: EGFR pre-clinical; immuno-oncology (CTLA4 + PD-1 protein targets); GBM – pre-clinical and phase 1 data published.

In addition, our strategic partners have validated the opportunity. We have granted a license to Teijin Pharma to commercialize GBM in Japan and we have granted certain license and distribution rights to Sayre Therapeutics for GBM and DMG treatments in India.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS	ii

GLOSSARY OF CERTAIN TERMS	1

PROSPECTUS SUMMARY	4

SUMMARY OF THE OFFERING	8

RISK FACTORS	11

USE OF PROCEEDS	39

DIVIDEND POLICY	40

CAPITALIZATION	41

DILUTION	42

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	43

BUSINESS	48

MANAGEMENT	85

EXECUTIVE AND DIRECTOR COMPENSATION	90

PRINCIPAL STOCKHOLDERS	94

CERTAIN RELATIONSHIPS AND RELATED PERSONS TRANSACTIONS	95

DESCRIPTION OF SECURITIES	96

SHARES ELIGIBLE FOR FUTURE SALE	102

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS OF OUR COMMON STOCK	103

UNDERWRITING	106

LEGAL MATTERS	112

EXPERTS	112

WHERE YOU CAN FIND MORE INFORMATION	112

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1

	Use of Net Proceeds
Clinical Trials	$	1,040,000
Preclinical Research and Development	$	175,000
Technology Development	$	200,000
Consulting and Other Fees	$	2,600,000
Working Capital	$	3,500,000

	As of June 30, 2023
	Actual (1)			Pro Forma			Pro Forma As Adjusted (2)
Cash and restricted cash	$	163		$	163		$	9,343
Accrued and other current liabilities		3,873			3,873			304
Debt		11,639			11,639			872
Deferred compensation and postemployment benefits		11,709			11,709			370
Total stockholders’ deficit:
Preferred Stock, $0.001 par value. Authorized 10,000,000 Shares
Series A convertible preferred stock. 1,817,333 shares authorized; 1,817,333 shares issued and outstanding as of June 30, 2023		1,236			-			-
Series A-1 convertible preferred stock 2,400,000 shares authorized; 2,399,997 shares issued and outstanding as of June 30, 2023		18,000			-			-
Common Stock, $0.001 par value, 100,000,000 shares authorized, 6,215,279 shares issued and outstanding as of June 30, 2023; 13,862,166 shares issued and outstanding on a pro forma as adjusted basis.		6			21			14
Additional paid-in capital		150,196			169,417			204,279
Accumulated deficit		(197,114	)		(197,114	)		(197,114	)
Total stockholders’ equity (deficit)		(27,676	)		(27,676	)		7,179
Capitalization	$	(4,328	)	$	(4,328	)	$	8,421

Assumed public offering price per Share	$	5.00
Historical net tangible book value (deficit) per Share as of June 30, 2023	$	(4.45	)
Pro forma historical net tangible book value (deficit) per Share as of attributable to the pro forma transaction described above	$	(3.33	)
Pro forma as adjusted historical net tangible book value (deficit) per Share as of attributable to the pro forma as adjusted transaction described above	$	0.52
Increase in pro forma as adjusted net tangible book value per Share as of attributable to the pro forma as adjusted transactions described above	$	3.85
Pro forma net tangible book value per Share as of June 30, 2023	$	0.52
Dilution per Share to new investors in this Offering	$	4.48

	Per Share		Total
Public offering price	$	[●]	$	[●]
Underwriting discounts and commissions ⁽¹⁾	$	[●]	$	[●]
Proceeds to us, before expenses	$	[●]	$	[●]

THE BENCHMARK COMPANY	BROOKLINE CAPITAL MARKETS
	a division of Arcadia Securities, LLC

	●	our ability to develop investigational products and obtain regulatory approvals and commercialize our products;
	●	our ability to expand into new markets and future indications;
	●	the acceptance of our products by patients and the healthcare community, including physicians and third-party payers (both private and governmental), as therapeutically effective and safe;
	●	the accomplishment of various scientific, engineering, clinical, regulatory and other goals, which we sometimes refer to as milestones, on our anticipated timeline;
	●	the relative cost, safety and effectiveness of alternative therapies;
	●	our ability to obtain and maintain sufficient coverage or reimbursement by private and governmental third-party payers and to comply with applicable health care laws and regulations;
	●	the ability of our third-party manufacturers to manufacture our products in sufficient quantities with acceptable quality;
	●	our ability to provide marketing, distribution and customer support for our products;
	●	the presence of competitive products in our active indications;
	●	results of future clinical studies relating to our products or other competitor products for similar indications;
	●	compliance with applicable laws and regulatory requirements, in particular in the United States, the EU and Japan;
	●	the maintenance of our regulatory approvals, if obtained; and
	●	the consequences of any reportable adverse events involving our products.

	●	the severity of the disease under investigation;
	●	the limited size and nature of the patient population;
	●	the patient eligibility criteria defined in our protocol and other clinical study protocols;
	●	the nature of the study protocol, including the attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled subjects;
	●	difficulties and delays in clinical studies that may occur as a result of the COVID-19 pandemic;
	●	the ability to obtain IRB approval at clinical study locations;

	●	clinicians’ and patients’ perceptions as to the potential advantages, disadvantages and side effects of our products in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are pursuing;
	●	availability of other clinical studies that exclude use of our products;
	●	the possibility or perception that enrolling in a product’s clinical study may limit the patient’s ability to enroll in future clinical studies for other therapies due to protocol restrictions;
	●	the possibility or perception that our software is not secure enough to maintain patient privacy;
	●	patient referral practices of physicians;
	●	the ability to monitor patients adequately during and after treatment;
	●	the availability of appropriate clinical study investigators, support staff, drugs and other therapeutic supplies and proximity of patients to clinical sites;
	●	physicians’ or our ability to obtain and maintain patient consents; and
	●	the risk that patients enrolled in clinical studies will choose to withdraw from or otherwise not be able to complete a clinical study.

	●	it may be difficult to gain broad acceptance of our products because they are new technologies and involve a novel or derivative mechanism of action and, as such, physicians may be reluctant to prescribe our products without prior experience or additional data or training;
	●	physicians may be reluctant to prescribe our products due to their perception that the supporting clinical study designs have limitations, as they are, for example, unblinded;
	●	physicians at large academic universities and medical centers may prefer to enroll patients into clinical studies instead of prescribing our products;
	●	it may be difficult to gain broad acceptance at community hospitals where the number of patients seeking treatment may be more limited than at larger medical centers, and such community hospitals may not be willing to invest in the resources necessary for their physicians to become trained to use our products, which could lead to reluctance to prescribe our products;
	●	patients may be reluctant to use our products for various reasons, including a perception that the treatment is untested or difficult to use or a perception that our software is not secure;
	●	our products may have side effects and our products cannot be worn in all circumstances; and
	●	the price of our products includes a monthly fee for use of the device and therefore, as the duration of the treatment course increases, the overall price will increase correspondingly and, when used in combination with other treatments, the overall cost of treatment will be greater than using a single type of treatment.

	●	achieving patient acceptance could be difficult because we are targeting devastating diseases with poor prognoses, and not all patients with potentially short lifespans are willing to comply with requirements of treatment with our products, and other patients may forego our products for financial, privacy, cosmetic, visibility or mobility reasons;
	●	achieving patient compliance may be difficult because the recommended use of our oncology products is throughout the day, requiring patients to wear the device nearly continuously, which to some extent restricts physical mobility because the battery must be frequently exchanged and recharged, and the patient or a caregiver must ensure that it remains continuously operable and this may also impact the pool of patients to whom physicians may be willing to prescribe our products;
	●	certain patients are contraindicated to using our products due to a variety of factors, including, but not limited to, those who have an implanted ferrous medical device or other ferrous implant at the site where the device is to be worn;

	●	there may be certain perceived limitations to our study designs or data obtained from our clinical studies;
	●	effectiveness may also be limited in instances where patients take a break from the device when experiencing skin rashes, or while bathing or swimming (because our products should not get wet); and
	●	patients may decline therapy or prescribers may be unwilling to prescribe our products due to certain adverse events attributable to the device reported in clinical studies by patients treated with our products; adverse events reported in clinical studies by patients treated with our products were nausea, fatigue, excessive sleepiness, and vomiting, but those adverse events were identified as being only “possibly” related to the device.

	●	unanticipated adverse events or other side effects that are not currently known may occur during our clinical studies that may preclude additional regulatory approval or result in additional limitations to commercial use if approved; and
	●	the data collected from our clinical studies may not reach statistical significance or otherwise not be sufficient to support FDA or other regulatory approval.

	●	decreased demand for our products;
	●	injury to our reputation;
	●	withdrawal of clinical study participants and inability to continue clinical studies;
	●	initiation of investigations by regulators;
	●	costs to prepare for and defend the related litigation;
	●	a diversion of management’s time and our resources;
	●	substantial monetary awards to study participants or patients;
	●	product recalls, withdrawals or labeling, marketing or promotional restrictions;
	●	loss of revenues;
	●	exhaustion of any available insurance and our capital resources;
	●	the inability to commercialize any device candidate; and
	●	a decline in our share price.

	●	delays and/or difficulties in onboarding active patients and enrolling patients in our clinical studies;
	●	delays and/or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
	●	declines in prescriptions written due to a perception that our products are difficult to administer remotely or if patients are unwilling to travel to treatment sites or receive in-home treatment assistance from us or other caregivers;
	●	reductions in third-party reimbursements, which could materially affect our revenue, as most of our patients rely on third-party payers to cover the cost of our products and a material number of our patients could lose access to their private health insurance plan if they or someone in their family lose their job;
	●	diversion of healthcare resources away from conducting clinical studies, including the diversion of hospitals serving as our clinical study sites and hospital staff supporting the conduct of our clinical studies;
	●	interruption of key clinical study activities, such as clinical study site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;
	●	staff disruptions and turnover internally and at treatment sites and third-party providers who provide support, either directly as a result of illness or indirectly as a result of vaccine mandates and other changes in terms of employment;
	●	delays in receiving approval from local regulatory authorities or IRBs to initiate our planned clinical studies;
	●	delays in clinical sites receiving the supplies and materials needed to conduct our clinical studies;
	●	interruption in global shipping that may affect the transport of active patient and clinical study materials;
	●	changes in local regulations as part of a response to the COVID-19 outbreak that may require us to change the ways in which our clinical studies are conducted, which may result in unexpected costs, or to discontinue the clinical studies altogether;
	●	delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees;
	●	disruption of our supply chain as our suppliers and common carriers are unable to meet our requirements to provide us the materials we need for clinical study and active patient care needs;
	●	indirect consequences of the COVID-19 pandemic on the global economy in general, such as an increase in bankruptcies of our key suppliers, or the inability of our third-party payers to meet their obligations reimburse us in a timely fashion or at all;
	●	postponements and cancellations of key conferences and meetings and travel restrictions could interfere with our ability to interact with key thought leaders in the field, leading to a disruption in the rate of adoption of our technology;
	●	access restrictions at offices, hospitals, and treatment centers, and stakeholder illness could interfere with the ability of our sales force to engage in face-to-face visits with providers, leading to a disruption in the rate of adoption of our technology;
	●	increases in expenditures for technology and other tools necessary to provide patient care in an environment where both patient and care-giver travel is restricted and access to in-person interaction is limited;
	●	refusal of the FDA to accept data from clinical studies in affected geographies outside the United States; and
	●	patient delays in seeking or receiving treatment, either due to fear of infection or lack of access to treatment and study sites, leading to fewer diagnoses of the indications our products are approved to treat or more advanced procession of the disease, which may contraindicate the use of our products or disqualify the patient from participating in a given study.

	●	the device candidate may have unforeseen adverse side effects or may not appear to be more effective than current therapies;
	●	we may not agree with the FDA, a regulatory authority in another jurisdiction or an ethics committee regarding the protocol for the conduct of a clinical study;
	●	new therapies may become the standard of care while we are conducting our clinical studies, which may require us to revise or amend our clinical study protocols or terminate a clinical study; or
	●	adverse events may occur during a clinical study due to medical problems that may or may not be related to clinical study treatments.

	●	untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;
	●	unanticipated expenditures to address or defend such actions;
	●	patient notification, or orders for repair, replacement or refunds;
	●	voluntary or mandatory recall, withdrawal or seizure of our current or future devices;
	●	administrative detention by the FDA or other regulatory authority in another jurisdiction of medical devices believed to be adulterated or misbranded;

	●	operating restrictions, suspension or shutdown of production;
	●	refusal or delay of our requests for approval of an HDE, HDE supplemental application, PMA, supplemental PMA or analogous approval for new intended uses for or modifications to our products or for approval of new devices;
	●	refusal or delay in obtaining CE Certificates for new intended uses for or modifications to our products;
	●	suspension, variation or withdrawal of the CE Certificates granted by our notified body in the EU;
	●	prohibition or restriction of products being placed on the market;
	●	operating restrictions;
	●	suspension or withdrawal of HDE, PMA or analogous approvals that have already been granted;
	●	refusal to grant export approval for our products or any device candidates; or
	●	criminal prosecution.

	●	the U.S. federal Anti-Kickback Statute, an intent-based federal criminal statute which prohibits knowingly and willfully offering, providing, soliciting or receiving remuneration of any kind to induce or reward, or in return for, referrals or the purchase, lease, order or recommendation or arranging of any items or services reimbursable by a federal healthcare program;
	●	the Federal Civil False Claims Act, which imposes civil penalties, including through civil whistleblower or “qui tam” actions, for knowingly submitting or causing the submission of false or fraudulent claims of payment to the federal government, knowingly making, using or causing to be made or used a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government;
	●	the Federal Criminal False Claims Act, which is similar to the Federal Civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government;
	●	Medicare laws and regulations that prescribe requirements for coverage and reimbursement, including the conditions of participation for DME suppliers, and laws prohibiting false claims or unduly influencing selection of products for reimbursement under Medicare and Medicaid;
	●	healthcare fraud statutes that prohibit false statements and improper claims to any third-party payer;
	●	the Federal Physician Self-Referral Law, commonly known as the Stark law, which, absent an applicable exception, prohibits physicians from referring Medicare and Medicaid patients to an entity for the provision of certain designated health services (DHS), including DME, if the physician (or a member of the physician’s immediate family) has an impermissible financial relationship with that entity and prohibits the DHS entity from billing for such improperly referred services;

	●	the Federal Beneficiary Anti-Inducement Statute, which prohibits the offering of any remuneration to a beneficiary of Medicare or Medicaid that is likely to influence that beneficiary’s choice of provider or supplier. This can include, but is not limited to, inappropriate provision of patient services including financial assistance. Recent government investigations have focused on this particular prohibition. There are established exceptions from liability, but we cannot guarantee that all of our practices will fall squarely within those exceptions;
	●	similar state anti-kickback, false claims, insurance fraud and self-referral laws, which may not be limited to government-reimbursed items, as well as state laws that require us to maintain permits or licenses to distribute DME;
	●	federal and state accreditation and licensing requirements applicable to DME providers and equivalent requirements in other jurisdictions;
	●	the U.S. Foreign Corrupt Practices Act, which can be used to prosecute companies in the U.S. for arrangements with physicians or other parties outside the U.S. if the physician or party is a government official of another country and the arrangement violates the law of that country;
	●	the Federal Trade Commission Act, the Lanham Act and similar federal and state laws regulating truthfulness in advertising and consumer protection; and
	●	the Federal Physician Payments Sunshine Act, the French Sunshine Act and similar state and foreign laws, which require periodic reporting of payments and other transfers of value made to U.S. and French-licensed physicians, teaching hospitals, and in the U.S., physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives.

	●	timing of market introduction of competitive products;
	●	demonstration of clinical safety and effectiveness compared to other products;
	●	cost-effectiveness;
	●	limited or no coverage by third-party payers;
	●	convenience and ease of administration;
	●	prevalence and severity of adverse side effects;
	●	restrictions in the label of the device;
	●	other potential advantages of alternative treatment methods; and
	●	ineffective marketing and distribution support of our products.

	●	actual or anticipated variations in our periodic operating results;
	●	actual or anticipated changes in our growth rate relative to our competitors;
	●	increases in market interest rates that lead investors of our Common Stock to demand a higher investment return;
	●	changes in earnings estimates;
	●	changes in market valuations of similar companies;
	●	actions or announcements by our competitors;
	●	adverse market reaction to any increased indebtedness we may incur in the future;
	●	sales of our Common Stock by our officers, directors, or significant stockholders;
	●	additions or departures of key personnel;
	●	our progress toward developing our products;
	●	the commencement, enrollment and results of our future clinical trials;
	●	adverse results from, delays in or termination of our clinical trials;
	●	adverse regulatory decisions, including failure to receive regulatory approval;
	●	publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts, if any;
	●	perceptions about the market acceptance of our products and the recognition of our brand;
	●	threatened or actual litigation and governmental investigations;
	●	actions by shareholders;
	●	speculation in the media, online forums, or investment community; and
	●	our intentions and ability to list our Common Stock on Nasdaq and our subsequent ability to maintain such listing.

	●	not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
	●	being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and
	●	being exempt from the requirement to hold a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

	●	on an actual basis;
	●	on a pro forma basis to reflect the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 8,478,167 shares of Common Stock
	●	on a pro forma as adjusted basis to reflect the issuance and sale of the Shares by us in this Offering at an assumed public offering price of $5 per Share, which is the midpoint of the range set forth on the cover page of this prospectus, 3,084,000 shares of Common Stock issuable upon conversion of debt and accrued interest in connection with the closing of this Offering, after deducting the estimated underwriting discounts and the estimated offering expenses payable by us and giving effect to the general release of deferred compensation and postemployment benefits in the amount of $11,339 effective as of the date our shares are issued through an initial public offering begin to trade on Nasdaq as executed by two co-founders.

	●	159,454 shares of our Common Stock issuable upon exercise of warrants to purchase Common Stock;

	●	200,000 shares of our Common Stock (49,780 shares of which have been issued and some of which are subject to vesting) issuable upon exercise of options to purchase Common Stock and 3,800,000 shares of our Common Stock (2,905,290 shares of which have been issued and are subject to vesting) issuable upon exercise of Restricted Stock Units to receive Common Stock under our Amended and Restated 2016 Equity Incentive Plan (the “Plan”); and

	●	40,000 shares of our Common Stock issuable upon exercise of the Representative’s warrants to purchase Common Stock.

	●	no exercise of the outstanding options or warrants described above; and

	●	no exercise of the underwriters’ option to purchase up to an additional 345,000 shares of Common Stock to cover over-allotments, if any, or any warrants issued to the underwriters as fees.

	Six Months Ended June 30,
	2023			2022			$ Change
(in thousands)
Royalty Revenue, related party	$	100		$	176		$	(76	)
License Revenue, related party		-			-			-

Operating expenses:
Research and development		321			164			157
General and administrative		6,728			7,644			(916	)

Total operating expenses		7,049			7,808			(759	)

Loss from operations		(6,949	)		(7,632	)		683

Other income (expense):
Unrealized loss on investment		980			(4,810	)		5,790
Other income		-			-			-
Interest expense		(1,027	)		(1,393	)		366
Total other income (expense)		(47	)		(6,203	)		6,156

Net income (loss)	$	(6,996	)	$	(13,835	)	$	6,839

	Years Ended December 31,
	2022			2021			$ Change
(in thousands)
Royalty Revenue, related party	$	294		$	221		$	73
License Revenue, related party		-			20			(20	)

Operating expenses:
Research and development		658			1,536			(878	)
General and administrative		13,590			10,033			3,557

Total operating expenses		14,248			11,569			2,679

Loss from operations		(13,954	)		(11,328	)		(2,626	)

Other income (expense):
Unrealized loss on investment		(5,755	)		(8,089	)		2,334
Other income		314			318			(4	)
Interest expense		(2,214	)		(2,993	)		779
Total other income (expense)		(7,655	)		(10,764	)		3,109

Net income (loss)	$	(21,609	)	$	(22,092	)	$	483

	Year Ended December 31,
	2022			2021
(in thousands)
Net cash used in operating activities	$	(4,084	)	$	(3,322	)
Net cash provided by (used in) investing activities		-			-
Net cash provided by financing activities		3,633			3,550

Net increase (decrease) in cash and restricted cash	$	(451	)	$	228

	At June 30, 2023 (in thousands)
Current Assets	$	485
Noncurrent Assets		1,964
Current Liabilities		1,674
Noncurrent Liabilities		2,515
Total equity		(1,740	)

	For the Six Months Ended June 30, 2023 (in thousands)		For the Six Months Ended June 30, 2022 (in thousands)
Revenues	$	513	$	667
Gross Profit		136		121
Net loss		1,880		1,422
Net loss and comprehensive loss		1,880		1,419

	Years Ended
	December 31, 2022 (in thousands)			December 31, 2021 (in thousands)
Current assets	$	727		$	4,006
Noncurrent assets		2,071			2,283
Current liabilities		(2,076	)		(1,578	)
Noncurrent liabilities		(702	)		(3,103	)
Total equity		20			1,608

	Years Ended
	December 31, 2022 (in thousands)			December 31, 2021 (in thousands)
Revenues	$	1,821		$	1,728
Gross Profit		939			479
Net loss		(3,674	)		(6,732	)
Net loss and comprehensive loss		(3,674	)		(6,728	)

	1.	Pioneering: We seek to be pioneers. We believe that great change can happen only when someone takes the lead and the risk. We are committed to modernizing disease treatment by pioneering what we believe is groundbreaking medical technology.
	2.	Responsibility: We believe there is a need for safe, effective and affordable treatments for cancer, acute and chronic pain, mental health conditions, and other serious diseases. We are seeking to develop and provide these treatments to patients around the world.
	3.	Partnership: We believe that developing the best technology means forming a diverse set of partnerships across a broad range of disciplines – including industry and research partners around the world.
	4.	Leadership: Our platform technology is the result of more than two decades of cutting-edge research and development. We believe this dedication and commitment to our mission will help transform the treatment of some of the world’s most serious diseases and address worldwide health and environmental challenges.