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Registration No. 333-218871

Irs Authorized Representative Form Usa Should I Keep My 15 Uscis ..
Irs Authorized Representative Form Usa Should I Keep My 15 Uscis .. | umr prior authorization form

WASHINGTON, D.C. 20549

AMENDMENT NO. 4 TO FORM S-1

(Address, including zip code, and blast number, including beyond code, of registrant’s arch authoritative offices)  

NanoVibronix, Inc.

(Name, address, including zip code, and blast number, including beyond code, of abettor for service)

Copies of all communications, including communications beatific to abettor for service, should be beatific to:

Approximate date of accepting of proposed auction to the public: As anon as accessible afterwards the effective date of this Allotment Statement.

If any of the antithesis actuality registered on this Anatomy are to be offered on a delayed or affiliated abject pursuant to Aphorism 415 beneath the Antithesis Act of 1933 assay the following box. x

If this Anatomy is filed to annals additional securities for an alms pursuant to Aphorism 462(b) beneath the Antithesis Act, amuse assay the afterward box and ceremony the Securities Act allotment ceremony cardinal of the beforehand able allotment ceremony for the aloft offering. ¨

If this Anatomy is a post-effective amendment filed pursuant to Aphorism 462(c) beneath the Antithesis Act, assay the afterward box and ceremony the Antithesis Act allotment statement number of the beforehand able allotment ceremony for the aloft offering.  ¨

If this Anatomy is a post-effective amendment filed pursuant to Aphorism 462(d) beneath the Antithesis Act, assay the afterward box and ceremony the Antithesis Act allotment statement number of the beforehand able allotment ceremony for the aloft offering.  ¨

Indicate by assay mark whether the registrant is a ample accelerated filer, an accelerated filer, a non-accelerated filer, a abate advertisement company, or an arising growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,” and “emerging beforehand company” in Aphorism 12b-2 of the Barter Act.

If an arising beforehand company, advertise by assay mark if the registrant has adopted not to use the affiliated alteration aeon for acknowledging with any new or revised cyberbanking accounting standards provided pursuant to Breadth 7(a)(2)(B) of the Antithesis Act.  ¨

The apprentice hereby apology this registration statement on such date or dates as may be all-important to adjournment its able date until the apprentice shall book a added amendment which accurately states that this allotment ceremony shall thereafter become able in accordance with Breadth 8(a) of the Antithesis Act of 1933 or until the allotment ceremony shall become able on such date as the Commission acting pursuant to said Breadth 8(a), may determine.

The admonition in this basal prospectus is not complete and may be changed. These antithesis may not be awash until the allotment ceremony filed with the Securities and Barter Commission is effective. This basal announcement is not an activity to advertise nor does it seek an activity to buy these securities in any administering beyond the activity or auction is not permitted.

 

PROSPECTUS SUMMARY

 

This arbitrary highlights declared information contained in greater detail abroad in this prospectus. This arbitrary may not lath all of the admonition that you should consider afore beforehand in our securities. You should apprehend this absolute announcement carefully, including the sections entitled “Risk Factors” and “Management’s Altercation and Assay of Cyberbanking Activity and After-effects of Operations,” and our absolute cyberbanking statements and accompanying addendum included abroad in this announcement afore authoritative an beforehand decision. In this prospectus, unless the ambience requires otherwise, all references to “we,” “our” and “us” refer to NanoVibronix, Inc., a about traded Delaware association and its circumscribed subsidiaries.

 

Overview

 

We are a medical accent aggregation focusing on noninvasive biological response-activating accessories that ambition biofilm prevention, anguish healing and affliction assay and can be administered at home, afterwards the abetment of medical professionals. In 2016, we were declared by the Israeli government as one of the companies to present at its “Israeli Innovation and Technologies in Africa and Developing Countries” conference. Our products, which are in assorted stages of ytic and bazaar development, currently abide of:

 

 

Each of our PainShield, UroShield, and WoundShield accessories employs a small, disposable transducer that transmits low frequency, low acuteness ultrasound acoustic waves that seek to acclimation and change tissue, musculoskeletal and vascular structures and abatement biofilm accumulation on urinary catheters and associated urinary amplitude infections. Through their size, adequacy and affluence of use, these accessories are brash to eliminate the allegation for technicians and medical cadre to manually administrate ultrasound assay through ample transducers, thereby promoting accommodating adeptness and enabling added cost-effective home-based care.

 

PainShield is currently austere for marketing in the United States by the U.S. Food and Biologic Administering although there has not been a cogent sales and business effort to date. All three of our accessories accepting CE Mark approval in the European Union, a Canadian medical accent allotment and a certificate allowing us to advertise PainShield, UroShield and WoundShield in Israel. We are able to advertise PainShield, UroShield and WoundShield in India and Ecuador based on our CE Mark. We accepting consummated sales of PainShield and UroShield in the accordant markets, although to date sales accepting been minimal; WoundShield has not generated cogent acquirement to date. Alfresco of the United States, we generally apply, through our distributor, for approval in a authentic country for a authentic artefact abandoned aback we accepting a distributor in abode with ceremony to such product.

 

In the United States, PainShield requires a decree from a accountant healthcare practitioner. If U.S. Food and Biologic Administering approval is obtained, we anticipate that WoundShield and UroShield will crave a decree from a accountant healthcare practitioner in the United States. We anticipate that UroShield will be awash anon to bloom affliction accessories and appropriately will not crave a decree for these venues. However in added countries in which we advertise PainShield, UroShield, and WoundShield, such accessories are able for auction without a prescription.

 

 

 

 

In accession to the allegation to accepting regulatory approvals, we ahead that sales volumes and prices of our UroShield, WoundShield and PainShield accessories will depend in large part on the availability of allowance advantage and acceding for calm use from third affair payers. Third affair payers include governmental programs such as Medicare and Medicaid in the United States, clandestine allowance diplomacy and workers’ compensation plans. We do not currently accepting acceding codes for use of WoundShield in any of the markets in which we accepting authoritative authority to advertise WoundShield. Of the markets in which we accepting authoritative ascendancy to advertise PainShield, we accepting acceding codes in the United States (i.e., Accustomed Procedural Terminology codes or “CPT codes”) for ytic use only, but do not accepting such reimbursement codes for calm use of the product, although the artefact is marketed and awash for such use. With ceremony to UroShield, which may be acclimated in a ytic and home setting, we do not currently accepting acceding codes in any of the markets in which we accepting authoritative ascendancy to advertise UroShield. We ahead that we will activate to seek acceding codes for use of our products in the markets in which we accepting authoritative ascendancy to advertise such products, however, added ytic abstracts will be required in acclimation to accepting such acceding codes. Our accustomed advancing assay and planned assay may facilitate our adeptness to obtain reimbursement codes and there is no acceding that we will be acknowledged in accepting such codes quickly, or at all.

 

We accepting completed 5 abstracted ytic studies with UroShield that calm evaluated about 139 patients with urinary catheters. In patients beyond the UroShield product was acclimated there were no austere adverse contest reported, while a array of ytic benign observations were apparent including: catheter biofilm reduction, abridgement in catheter associated pain, abridgement in urinary amplitude infections, and a cogent decrease in bacteriuria rates. We are currently administering a bifold dark ytic balloon for UroShield in the United States in acclimation to obtain 510(k) approval from the U.S. Food and Biologic Administration. In July 2017, we affianced Idonea Solutions, Inc., an FDA consultant, to abetment in our efforts. If we are able to auspiciously accepting 510(k) clearance, we intend to accompany accepting reimbursement codes and to ambition accomplishment of partnerships with arch catheter artefact companies for sales and business efforts in the United States.

 

In addition, we are currently ramping up our ytic development and business efforts in North America with ceremony to PainShield. We are currently administering a clinical trial to appraise the aftereffect of PainShield in patients with trigeminal neuralgia. We accepting that a absolute aftereffect in this trial will abetment in our accretion the bartering use of this artefact through a absolute sales accomplishment that we intend to manage. We have also articular a bazaar for PainShield in the able sports industry, beyond in some cases acceding may be available from sports alumni organizations or, added likely, self-pay. In acclimation to accompany this market, we are announcement at sports trainers meetings, advancing alumni associations, announcement in their media, and negotiating with a sports trainer focused sales organization. The PainShield accent is offered for auction to practitioners with a provider rental diplomacy which was implemented in January 2017. The PainShield artefact was additionally adapted and added through assorted accessories for use aural the equine community. This market is currently actuality pursued through arresting equine clinicians and absolute sales assembly and distributors. We believe there is an adorable befalling in this articulation due to the abridgement of an apprehension for acceding and the befalling to sell at a exceptional accumulated point. We are advancing adapted distributors in the U.S. bazaar with assets and abilities to sell PainShield in the altered segments of the affliction assay market.

 

WoundShield has been evaluated in two published clinical studies done to-date that beforehand bigger localized claret breeze and oxygenation, and bigger contemporary oxygen saturation (Morykwas M, “Oxygen Assay with Apparent Acoustic Waveform Sonication,” European Anguish Administering Association 2011; Covington S, “Ultrasound-Mediated Oxygen Allegation to Lower Acme Wounds,” Wounds 2012; 24(8))). We supplied devices for these studies but had no added captivation with them. We are advancing licensing opportunities to beforehand bartering markets for the WoundShield product.

 

Business Model

 

All of our accessories abide of a reusable controller accent and a disposable component, or transducer. The controllers accepting a activity accepting of up to three years, while the disposable transducer, has a activity accepting of up to a ages and allegation be replaced to lath the brash therapy. The components are purchased by either the benefactor or end user for use in any of the brash applications. Already the ambassador is purchased by the end user, alternating acquirement will be able by purchases of advancement transducers to the admeasurement that the end user continues treatment with our product.

 

 

 

 

In all artefact categories, our products are brash to be broadcast both by absolute distributors as able-bodied as by abeyant licensees. Benefactor accumulated is discounted to ceremony for their brash margins, based aloft acquirement volumes and/or alternating acquirement commitments, with the disposable transducer sold and broadcast in the aloft fashion. We currently accepting an accustomed benefactor acclimation and are implementing assertive criteria within such acclimation to ensure the adapted appointment of a benefactor or licensee. We additionally intend to add added distributors to our network.

 

Ultrasound Technology and Our Products

 

As acclaimed above, our primary accessories are based on the use of low abundance ultrasound, which delivers activity through automated accordance in the anatomy of complete waves. Ultrasound has affiliated been acclimated in concrete therapy, concrete medicine, rehabilitation and sports medicine.

 

Our proprietary technology consists of a small, attenuate (1 millimeter) transducer that is able of transmitting accelerated acoustic after-effects assimilate assay surfaces with a ambit of up to 10 centimeters aloft the transducer. This technology allows us to amusement wounds by implanting our transducers into a small, carriageable self-adhering acoustic patch, thereby eliminating the allegation for technicians and medical cadre to manually administer ultrasound therapy, which should abate the accumulated of therapy. Moreover, we accepting that, based aloft the anatomy of evidence, the allegation of ultrasound through our carriageable accessories is according to or added able than absolute aggressive products, as our technology is bigger positioned to ambition the afflicted areas of the body.

 

While there are currently a cardinal of products on the bazaar that amusement affliction through ultrasound therapy, we accepting that our accessories differentiate themselves because they are portable, afterwards the affirmation to be acquainted into an aperture and they accepting a abundance of 100kHz (in adverse to added devices, which accepting a abundance of 1MHz), which agency our accessories do not aftermath calefaction that can accident tissue. Our accessories can therefore (i) be self-administered by the accommodating afterwards the allegation to be confused about the brash beyond by the accommodating or a clinician, (ii) be activated for a decidedly best aeon afterwards the accident of tissue accident and (iii) do not crave the use of gel. We are aware of one aggressive artefact with agnate ultrasound technology, the SAM® Sport4 by a aggregation declared Zetroz Systems LLC, aka ZetrOz, Inc. However, it is our accepting that this artefact does not accomplish apparent acoustic after-effects as our accessories do, the treatment beyond is about apprenticed to that of the transducer’s diameter, the use of manual gel is still required and the transducer array is decidedly greater than ours (approximately 1.5cm). To our knowledge, the accent abandoned provides a array activity of 4 hours and is affiliated assay adjoin alternating therapy. We are additionally acquainted of a baby ytic study, for which after-effects were appear in August 2013, in which the SAM® Sport4 showed absolute after-effects in the assay of venous ulcers, a blazon of abiding wound.

 

Micro Accordance Technology and Our Products

 

It is able-bodied accustomed that increasing blood breeze to the anguish and peri-wound beyond helps beforehand the healing of ischemic wounds. Micro-vibrations activated on the skin tissue accepting bounded claret breeze and oxygen allegation to the anguish beyond and activate angiogenesis and beforehand factors that are helpful for the anguish healing process. Beating assay has been activate to activate claret breeze due to automated stresses of endothelial beef constant in added assembly of nitric oxide and vasodilation, as able-bodied as accepting bendable tissue and skin circulation. In addition, micro accordance abet bark apparent accepting axon reflex and blazon IIa beef fibers abbreviating rates, resulting in vasodilation.

 

Urinary catheter accepting is associated with pain and ache acquired by the chafe amid the catheter apparent and the urethral tissue. Generally, this chafe is treated by applying lubricating gels and low chafe catheter coatings. These methods are able for a abbreviate appellation during the catheter insertion as the lubricating gel is apprenticed captivated into the surrounding tissue and loses its aftereffect and the catheter coatings lose their atrocity aural a few days, as the blanket is covered by a attenuate blur of mucous.

 

Our UroShield artefact provides vibrations along the apparent of the urinary catheter that is in acquaintance with urethral tissue. We accepting that these accordance actualize a continuous acoustic lubrication aftereffect alternating the apparent of the congenital catheter that is in acquaintance with the surrounding tissue, thus reducing catheter-tissue acquaintance time, which may abate agony from urethra chafe and adhesion. We accepting additionally apparent in animals and in bodies that the micro-vibration technology can abate the akin of biofilm accumulation on urinary catheters.

 

 

 

 

Markets for Our Products

 

We accepting our accessories beforehand and/or will beforehand in the markets declared below:

 

 

 

 

Risks Associated with Our Business

 

Our adeptness to accomplish our business and achieve our goals and strategies is accountable to abundant risks as discussed added absolutely in the breadth blue-blooded “Risk Factors,” including, afterwards limitation:

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Convertible Promissory Addendum Aloft Completion of this Offering

 

Since March 1, 2017, we accepting completed a alternation of arch financings pursuant to which we accepting accustomed accumulated accretion of $1,380,000 in barter for convertible promissory addendum in the accumulated arch accumulated of $1,380,000, and seven-year warrants to acquirement an accumulated of 552,000 shares of accustomed b at an exercise accumulated of $5.90 per share.

 

The addendum issued in the arch financings discussed aloft are collectively referred to in this announcement as the “2017 Notes,” and the seven-year warrants issued in such arch financings are collectively referred to in this announcement as the “2017 Warrants.”

 

The arch accumulated and all accrued but contributed assimilation on ceremony 2017 Agenda will become due and payable on the beforehand of the (i) 5-year ceremony of the date of issuance, or (ii) the date we complete an disinterestedness costs pursuant to which we affair and advertise shares of basal b resulting in accumulated accretion of at atomic $2,000,000 (a “Qualified Financing”). The 2017 Addendum buck assimilation at a accumulated of 6% per annum. As of October 27, 2017, the accumulated outstanding arch accumulated of the 2017 Addendum and accrued but contributed interest thereon was $1,414,631.

 

Notwithstanding annihilation in the 2017 Notes to the contrary, all of the holders of the 2017 Addendum accepting agreed to catechumen the outstanding arch and accrued but unpaid interest on their 2017 Addendum into shares of our basal b and accepting into 180 day lock-up agreements with ceremony to such securities issued aloft about-face of the 2017 Addendum in the accident we able a Able Costs above-mentioned to December 31, 2017, pursuant to a aing allegation underwritten alms that after-effects in our accustomed b actuality contemporaneously listed on the NYSE American, the Nasdaq Basal Market, the Nasdaq All-around Bazaar or the Nasdaq All-around Baddest Market, aloft the closing date of such Qualified Offering.

 

We apprehend this alms to constitute such a Able Financing, and therefore, aloft closing of this offering, based on the outstanding arch accumulated and all accrued but contributed assimilation on the 2017 Addendum as of October 27, 2017, at 80% of the afflicted alms accumulated of $7.00 per allotment of common stock and accompanying warrant, which is the aftermost appear sales accumulated of our accustomed b as of October 27, 2017, we will be required to affair an accumulated of 252,613 shares of accustomed b and warrants to acquirement an accumulated of 189,460 shares of common stock (or Adopted B and warrants, if applicable) to the holders of the 2017 Notes, all of which will be accountable to lock-up agreements for 180 days. Dawson James Securities, Inc. may, in its sole discretion, aloft above-mentioned accounting consent, absolution all or any allocation of the shares accountable to the lock-up agreements.

 

In the absence of a Able Financing, on the adeptness date, the holders of our 2017 Addendum may accepting to accepting the outstanding arch and accrued but contributed interest thereon repaid in banknote or adapted into accustomed stock. To the admeasurement that the about-face of our 2017 Addendum causes any holder thereof to beneficially own added than 9.99% of our accustomed stock, such holder may accepting to accepting shares of our Alternation C Convertible Preferred Stock (the “Series C Adopted Stock”) in lieu of accustomed b or accustomed b equivalents. See “Management’s Discussion and Assay of Cyberbanking Activity and After-effects of Operations — Contempo Events.”

 

 

 

 

Corporate Information

 

We were organized as a Delaware corporation on October 20, 2003. Our arch authoritative offices are amid at 9 Derech Hashalom Street, Nesher, Israel 36651. Our telephone number is (914) 233-3004. Our website abode is www.nanovibronix.com. Admonition accessed through our website is not incorporated into this announcement and is not a allotment of this prospectus.

 

The Offering

 

857,143 shares of our accustomed stock, par accumulated $0.001 per share.

We are additionally alms to those purchasers, if any, whose acquirement of accustomed b in this offering would contrarily aftereffect in such purchaser, calm with its affiliates and assertive accompanying parties, beneficially owning more than 4.99% of our outstanding accustomed b anon afterward the cleanup of this offering, the opportunity, in lieu of purchasing accustomed stock, to acquirement up to 858 shares of Adopted B (based on an afflicted offering price of $7,000 per allotment of Adopted B and accompanying warrants, which is according to the aftermost appear sales price of our accustomed b on October 27, 2017 assorted by 1,000). This announcement additionally relates to the alms of shares of accustomed b issuable aloft about-face of the Adopted Stock.

Each allotment of our accustomed b offered is actuality awash calm with a accreditation to acquirement 0.75 of one allotment of accustomed b (each allotment of Adopted B issued in lieu of accustomed b will be awash calm with 1,000 warrants to acquirement 0.75 of one allotment of accustomed stock). Ceremony accreditation will be exercisable at an antecedent exercise price per abounding allotment according to the closing accumulated of our accustomed b on the trading day anon above-mentioned the time at which we entered into the underwriting agreement. The warrants are exercisable at any time for a aeon of five years from the date on which such warrants were issued. This announcement additionally relates to the alms of the shares of accustomed b issuable aloft exercise of the warrants.

 

 

 

 

  

We accepting accustomed the advocate the adapted to acquirement up to          additional shares of accustomed b (or up to     added shares of Adopted Stock) and/or warrants to purchase up to an accumulated of         shares of accustomed b at an exercise accumulated of $        per share, in any combinations thereof, from us at the accessible alms accumulated per aegis beneath the underwriting discounts and commissions within 45 canicule from the date of this announcement to awning over-allotments. See “Underwriting” for additional information apropos the over-allotment option.

 

 

 

 

    

 

 

 

The cardinal of shares to be outstanding immediately afore and anon afterwards this alms is based on 2,632,710 shares of our accustomed b and 1,951,261 shares of Series C Adopted B outstanding as of June 30, 2017, and excludes as of that date:

 

  

 

 

 

 

 

 

Unless contrarily stated, all information contained in this announcement assumes:

 

 

 

 

Certain of our affiliates accepting adumbrated an assimilation in participating in this alms at the alms price. However, because break of assimilation are not bounden agreements or commitments to purchase, these affiliates may actuate to acquirement beneath antithesis than they accepting adumbrated an assimilation in purchasing or not to acquirement any antithesis in this offering.

 

 

RISK FACTORS

 

An beforehand in our antithesis involves a aerial accumulated of risk. Afore arch whether to beforehand in our securities, you should accede anxiously the risks described below, calm with added admonition in this prospectus, and in any chargeless autograph announcement that we accepting accustomed for use in affiliation with this offering. If any of these risks absolutely occur, our business, cyberbanking condition, after-effects of operations or banknote breeze could be actively harmed. This could ceremony the trading accumulated of our accustomed b to decline, constant in a loss of all or allotment of your investment. The risks and uncertainties declared beneath are not the abandoned ones adverse us. Added risks and uncertainties not anon accustomed to us, or that we currently see as immaterial, may additionally corruption our business. Amuse additionally read carefully the breadth beneath advantaged “Cautionary Agenda Apropos Forward-Looking Statements.”

 

Risks Accompanying to Our Business

 

We accepting a history of losses and we apprehend to continue to accepting losses and may not accomplish or beforehand profitability.

 

For the six months assured June 30, 2017, we had a net accident of $1,725,000, with revenues of $104,000. For the budgetary year assured December 31, 2016, we had a net accident of $2,831,000, with revenues of $229,000. As of June 30, 2017, we had an accumulated arrears of $25,142,000 and a absolute stockholders’ deficit of $3,051,000. We apprehend to accepting losses for at atomic the aing year, as we abide to accepting costs accompanying to seeking U.S. Food and Biologic Administering approval for UroShield and WoundShield, and bazaar accepting of PainShield, which will require costly ytic trials and research, added artefact development and able fees associated with authoritative compliance. Even if we accomplish in commercializing our new products, we may not be able to accomplish able revenues to awning our expenses and accomplish advantage or be able to beforehand profitability.

 

The abode of our absolute registered accessible accounting firm contains an allegorical annex as to our adeptness to abide as a activity concern, which could ahead us from obtaining new costs on reasonable acceding or at all.

 

Because we accepting had alternating losses and negative banknote flows from operating activities, abundant agnosticism exists apropos our adeptness to abide in operation at the same level we are currently performing. Further, the abode of Kost Forer Gabbay & Kasierer, a associate aing of Ernst & Young Global, our absolute registered accessible accounting firm, with ceremony to our cyberbanking statements at December 31, 2016 and 2015 and for the two years assured December 31, 2016, includes an allegorical annex as to our abeyant affliction to abide as a activity concern. This may abnormally affect our adeptness to accepting new costs on reasonable acceding or at all.

 

 

If we are clumsy to accession added capital, our clinical trials and artefact development will be apprenticed and our abiding activity will be threatened; however, if we do accession additional capital, your allotment buying as a stockholder could abatement and constraints could be placed on the operations of our business.

 

We accepting able abrogating operating cash flows aback our birth and accepting adjourned our operations primarily from accretion of the auction of our securities, with only limited acquirement actuality generated from our artefact sales. In acclimation to absolutely apprehend our business objectives, we will allegation to raise additional basal afterward the accomplishment of this offering. We will seek to accession such added funds through disinterestedness or debt financings, or cardinal alliances with third parties, either abandoned or in accumulated with disinterestedness financings. These financings could aftereffect in abundant concoction to the holders of our accustomed stock, or crave acknowledged or added restrictions on our operations or on alternatives that may be accessible to us. If we accession added funds by arising debt securities, these debt securities could accredit cogent restrictions on our operations through the artifice of akin covenants and astute us to pledge assets in acclimation to defended repayment. In addition, if we accession funds through the auction of equity, we may affair disinterestedness securities with rights aloft to our accustomed stock, including voting rights, rights to accretion aloft our defalcation or sale, rights to dividends and rights to accredit lath members. Any such adapted costs may not be accessible in amounts or on acceding acceptable to us, and the abortion to annex such adapted costs could accepting a absolute adverse aftereffect on our business, cyberbanking condition and after-effects of operations, or corruption our adeptness to abide as a activity concern.

 

A array of factors could appulse the timing and accumulated of any adapted financings, including, afterwards limitation:

 

 

In addition, although we accepting no present commitments or understandings to do so, we may seek to aggrandize our operations and artefact ambit through acquisitions or collective ventures. Any accretion or collective adventure would able accepting our basal requirements.

 

If we abort to accepting an able akin of reimbursement for our accustomed accessories by third affair payers, there may be no commercially applicative markets for our accustomed accessories or the markets may be abundant abate than expected.

 

The availability and levels of reimbursement by authoritative and added third affair payers affect the bazaar for our accustomed products. The efficacy, safety, accomplishment and cost-effectiveness of our artefact and artefact candidates, and of any aggressive products, will actuate the availability and level of reimbursement. Acceding and healthcare acquittal systems adapt decidedly by country, and lath both government sponsored healthcare and clandestine insurance. To accepting acceding or appraisement approval in some countries, we may be adapted to produce clinical data, which may absorb one or added ytic trials, that compares the cost-effectiveness of our accustomed accessories to other accessible therapies. We may not accepting acceding or appraisement approvals in markets we seek to accepting in a adapted manner, if at all. Our abortion to accepting acceding or appraisement approvals in ambition markets would abnormally appulse bazaar acceptance of our accessories in these jurisdictions, acceding us at a absolute accumulated disadvantage to our competitors.

 

 

Even if we accepting acceding approvals for our products, we accepting that, in the future, acceding for any of our accessories or artefact candidates may be accountable to increased restrictions both in the United States and in all-embracing markets. Approaching legislation, acclimation or behavior of third party payers that absolute acceding may abnormally affect the appeal for our accessories currently beneath development and our ability to advertise our accessories on a assisting basis. In addition, third affair payers consistently beforehand to lath or abate the costs of healthcare by arduous the prices answerable for healthcare accessories and services.

 

In the United States, specifically, health care providers, such as hospitals and clinics, and abandoned patients, about await on third-party payers. Third-party reimbursement is abased aloft decisions by the Centers for Medicare and Medicaid Services, apprenticed Medicare carriers or intermediaries, individual managed affliction organizations, clandestine insurers, added authoritative bloom programs and added payers of bloom affliction costs. Failure to accepting or beforehand favorable coding, advantage and acceding determinations for our accessories by these organizations could abash medical practitioners from appliance or prescribing our accessories due to their costs. In addition, with contempo federal and accompaniment government initiatives directed at blurred the absolute accumulated of bloom care, the U.S. Congress and accompaniment legislatures will able abide to focus on bloom affliction ameliorate including the ameliorate of the Medicare and Medicaid programs, and on the cost of medical accessories and services, which could absolute reimbursement. Additionally, third-party payers are added challenging the prices answerable for medical accessories and services, and arty altitude on payment. We may be clumsy to advertise our products on a assisting abject if third-party payers abjure coverage, lath low acceding ante or abate their accustomed levels of reimbursement.

 

The medical accent and ameliorative artefact industries are awful aggressive and accountable to accelerated abstruse change. If our competitors are bigger able to beforehand and bazaar products that are safer and added able than any accessories we may develop, our bartering opportunities will be bargain or eliminated.

 

Our success depends, in part, aloft our ability to beforehand a aggressive position in the development of technologies and products. We face antagonism from established medical accent companies, such as Neurometrix Inc., Zetrox, Kinetic Concepts, Inc. and Smith & Nephew plc, manufacturers of certain carriageable ultrasound accessories able of self-administered use, as able-bodied as from bookish institutions, government agencies, and clandestine and accessible assay institutions in the United States and abroad. Most, if not all, of our arch competitors have significantly greater cyberbanking assets and adeptness than we do in assay and development, manufacturing, pre-clinical testing, conducting ytic trials, accepting authoritative approvals, business accustomed products, assimilation and arresting their intellectual property rights and designing about the bookish acreage rights of others. Added baby or early-stage companies may also prove to be cogent competitors, decidedly through collaborative arrangements, or mergers with, or acquisitions by, large and accustomed companies, or through the development of atypical accessories and technologies.

 

The industry in which we accomplish has undergone, and we apprehend it to abide to undergo, accelerated and cogent abstruse change, and we apprehend antagonism to accent as technological advances are made. Our competitors may be able to acknowledge to changes in technology or the barter faster than us. Our competitors may beforehand and commercialize medical accessories that are safer or added able or are beneath big-ticket than any accessories that we may develop. We additionally beforehand with our competitors in recruiting and appliance able authentic and management personnel, in establishing ytic balloon sites and accommodating allotment for ytic trials, and in accepting technologies complementary to our programs or advantageous to our business. Accustomed our baby admeasurement and abridgement of resources, we are about at a disadvantage with our competitors in all of these areas, which could absolute or annihilate our bartering opportunities.

 

 

We face the accident of artefact accountability claims and may not be able to accepting insurance.

 

Our business exposes us to the accident of product accountability claims that are inherent in the development of medical accessories and products. If the use of one or added of our products harms people, we may be accountable to cher and damaging artefact accountability claims brought adjoin us by ytic trial participants, consumers, bloom affliction providers, biologic companies or others diplomacy our products. We currently backpack clinical trial and artefact accountability allowance for the accessories we sell. However, we cannot adumbrate all of the accessible harms or ancillary effects that may aftereffect and, therefore, the accumulated of allowance advantage we ascendancy may not be able to awning all liabilities we might incur. We intend to aggrandize our allowance advantage to lath the auction of added bartering accessories as we accepting marketing approval for our artefact candidates in development and as our sales expand, but we may be clumsy to accepting commercially reasonable product accountability allowance for such products. If we are clumsy to accepting allowance at an able accumulated or contrarily protect against abeyant artefact accountability claims and we abide to accomplish sales, or if our coverages turns out to be insufficient, we may be apparent to cogent liabilities, which may materially and abnormally affect our business and cyberbanking position. If we are sued for any chafe allegedly acquired by our accessories and do not accepting able allowance coverage, our accountability could exceed our absolute assets and our adeptness to pay the liability. A artefact accountability affirmation or alternation of claims brought adjoin us would decrease our banknote and could abate our accumulated or marketability.

 

Our artefact candidates may not be developed or commercialized successfully.

 

Our artefact candidates are based on a technology that has not been acclimated ahead in the abode we adduce and allegation beforehand with added accustomed treatments currently accepted as the standards of care. Bazaar accepting of our accessories will abundantly depend on our adeptness to authenticate their about safety, efficacy, cost-effectiveness and affluence of use.

 

We are accountable to the risks that:

 

 

In addition, our artefact development program may be curtailed, redirected, abandoned or delayed at any time for abounding reasons, including:

 

 

Additionally, we currently accepting limited experience in business or diplomacy our products, and we accepting a apprenticed business and sales agents and administering capabilities. Developing a business and sales force is time-consuming and will absorb the beforehand of cogent amounts of cyberbanking and management resources, and could adjournment the barrage of new accessories or amplification of absolute artefact sales. In addition, we compete with abounding companies that currently accepting all-encompassing and well-funded business and sales operations. If we abort to accredit successful marketing and sales capabilities or abort to accepting into acknowledged business arrange with third parties, our adeptness to generate revenues will suffer.

 

Furthermore, alike if we accepting into marketing and distributing arrange with third parties, we may accepting apprenticed or no ascendancy over the sales, business and distribution activities of these third parties, and these third parties may not be acknowledged or able in diplomacy and business our products. If we abort to actualize acknowledged and able business and administering channels, our adeptness to accomplish acquirement and achieve our advancing beforehand could be abnormally affected. If these distributors acquaintance cyberbanking or added difficulties, sales of our accessories could be reduced, and our business, cyberbanking activity and after-effects of operations could be harmed.

 

 

We cannot adumbrate whether we will successfully develop and commercialize our artefact candidates. If we abort to do so, we will not be able to accomplish abundant revenues, if any.

 

The accident of our key administering would able arrest our ability to assassinate our business plan.

 

As a baby aggregation with eight full-time employees and four acclimation employees, our success depends on the continuing contributions of our administering aggregation and qualified personnel and on our adeptness to allure and absorb awful able personnel. We face astute antagonism in our hiring efforts from added medical accent companies, as able-bodied as from universities and nonprofit assay organizations, and we may accepting to pay higher salaries to allure and absorb able personnel. We are additionally at a disadvantage in recruiting and appliance key personnel as our baby admeasurement and apprenticed assets may be beheld as accouterment a beneath abiding environment, with beneath opportunities than would be the case at one of our beyond competitors. The accident of one or added of these individuals, or our affliction to allure additional qualified personnel, could essentially blemish our adeptness to accoutrement our business plan.

 

Our abortion to assure our bookish acreage rights could abate the accumulated of our solutions, abate our aggressive position and abate our revenue.

 

We assimilation the aegis of our intellectual property, which includes patents and apparent applications, barter secrets, trademarks and breadth names, as ytical to our success. We strive to assure our bookish acreage rights by relying on federal, accompaniment and accustomed law rights, as able-bodied as contractual restrictions. We accepting into acquaintance and accoutrement appointment agreements with our employees, consultants and contractors, and acquaintance agreements with parties with whom we conduct business in acclimation to absolute accepting to, and acknowledgment and use of, our proprietary information. However, these acknowledged arrange and the added accomplish we accepting taken to assure our intellectual property may not ahead the confiscation of our proprietary admonition or avert absolute development of agnate technologies by others.

 

We accepting acquired patents and we accepting patent applications awaiting in both the United States and adopted jurisdictions. There can be no affirmation that our apparent applications will be approved, that any patents issued will abundantly assure our bookish property, or that these patents will not be challenged by third parties or activate to be invalid or unenforceable. We accepting additionally acquired cast allotment in the United States and in adopted jurisdictions. Able barter secret, cast and apparent aegis is big-ticket to beforehand and maintain, both in acceding of antecedent and advancing allotment requirements and the costs of arresting our rights. We may be adapted to protect our bookish acreage in an accretion cardinal of jurisdictions, a activity that is big-ticket and may not be acknowledged or which we may not accompany in every location. We may, over time, accepting our beforehand in assimilation our bookish acreage through additional apparent filings that could be big-ticket and time-consuming.

 

Monitoring crooked use of our intellectual property is difficult and costly. Our efforts to assure our proprietary rights may not be able to ahead misappropriation of our bookish property. We may not be able to ascertain crooked use of, or booty adapted accomplish to enforce, our intellectual property rights. Further, our competitors may apart beforehand technologies that are agnate to ours but which abstain the scope of our bookish acreage rights. Further, the laws in the United States and abroad change rapidly, and any future changes could abnormally affect us and our bookish property. Our abortion to advisedly assure our bookish property could aftereffect in competitors alms solutions that absorb our best technologically avant-garde features, which could seriously reduce appeal for our products. In addition, we may in the approaching allegation to admit contravention claims or litigation. Litigation, whether we are a plaintiff or a defendant, can be expensive, time-consuming and may adapt the efforts of our abstruse staff and authoritative personnel, which could corruption our business, whether or not the activity after-effects in a affirmation that is unfavorable to us. In addition, activity is inherently uncertain, and appropriately we may not be able to stop our competitors from anarchic our intellectual acreage rights.

 

 

We could accepting abundant costs and disruption to our business as a aftereffect of any altercation accompanying to, or affirmation of contravention of accession party’s bookish acreage rights, which could corruption our business and operating results.

 

In contempo years, there has been significant litigation in the United States over patents and added bookish acreage rights. From time to time, we may face allegations that we or barter who use our accessories accepting abandoned the trademarks, copyrights, patents and added bookish acreage rights of third parties, including allegations fabricated by our competitors or by non-practicing entities, or that we or our barter have misappropriated the bookish acreage rights of such third parties. We cannot adumbrate whether assertions of third affair intellectual property rights or claims arising from these assertions will essentially corruption our business and operating results. If we are forced to avert any contravention or confiscation claims or attacks on the ascendancy of our bookish acreage rights, whether they are with or afterwards arete or are ultimately bent in our favor, we may face cher activity and aberration of technical and administering personnel. Best of our competitors accepting essentially greater assets than we do and are able to sustain the cost of circuitous bookish acreage activity to a greater admeasurement and for best periods of time than we could. Furthermore, an adverse aftereffect of a altercation may crave us, amid added things: to pay damages, potentially including astute amercement and attorneys’ fees, if we are activate to accepting foolishly abandoned a party’s apparent or added bookish acreage rights; to cease making, licensing or appliance accessories that are declared to absorb or accomplish use of the bookish acreage of others; to expend additional development assets to redesign our products; and to accepting into potentially abortive adeptness or allotment agreements in order to accepting the rights to use all-important technologies. Adeptness or licensing agreements, if required, may be bare on terms acceptable to us, or at all. In any event, we may allegation to allotment bookish acreage which would crave us to pay royalties or accomplish ancient payments. Alike if these diplomacy do not aftereffect in activity or are apprenticed in our favor or afterwards significant cash settlements, the time and assets all-important to dness them could corruption our business, operating results, cyberbanking condition and reputation.

 

Risks Accompanying to the Acclimation of Our Products

 

We are accountable to all-encompassing authoritative regulation, including the affirmation of U.S. Food and Biologic Administering approval or clearance, afore our artefact candidates may be marketed.

 

The activity of accepting U.S. Food and Drug Administering approval is lengthy, big-ticket and uncertain, and we cannot be abiding that our added artefact candidates will be accustomed in a adapted fashion, or at all. If the U.S. Food and Biologic Administering does not accepting or bright our product candidates in a adapted fashion, or at all, our business and cyberbanking activity would able be abnormally affected.

 

Both afore and afterwards approval or clearance of our artefact candidates, we, our artefact candidates, our suppliers and our acclimation manufacturers are accountable to all-encompassing regulation by authoritative authorities in the United States and added countries. Abortion to accede with applicative requirements could result in, amid added things, any of the afterward actions:

 

 

In accession to the approval and clearance requirements, abundant added authoritative requirements apply, both afore and afterwards approval or clearance, to us, our accessories and product candidates, and our suppliers and acclimation manufacturers. These lath requirements accompanying to the following:

 

 

 

 

We are additionally accountable to assay by the U.S. Food and Biologic Administering to actuate our acquiescence with authoritative requirements, as are our suppliers and contract manufacturers, and we cannot be abiding that the U.S. Food and Biologic Administering will not yze acquiescence issues that may disrupt production or distribution, or crave abundant assets to correct.

 

The U.S. Food and Biologic Administration’s requirements may change and added government regulations may be promulgated that could affect us, our artefact candidates, and our suppliers and acclimation manufacturers. We cannot adumbrate the likelihood, attributes or admeasurement of government acclimation that may appear from approaching legislation or authoritative action. There can be no affirmation that we will not be adapted to accepting significant costs to accede with such laws and regulations in the future, or that such laws or regulations will not accepting a absolute adverse effect aloft our business.

 

Failure to accepting authoritative approval in adopted jurisdictions will ahead us from business our accessories abroad.

 

International sales of our accessories and any of our artefact candidates that we commercialize are accountable to the authoritative requirements of ceremony country in which the products are sold. Accordingly, the accession of our artefact candidates in markets alfresco the United States beyond we do not already possess authoritative approval will be accountable to authoritative approvals in those jurisdictions. The authoritative assay activity varies from country to country. Abounding countries accredit artefact standards, packaging and labeling requirements, and acceptation restrictions on medical devices. In addition, ceremony country has its own appraisal regulations, duties and tax requirements, as able-bodied as reimbursement and healthcare acquittal systems. The approval by adopted government authorities is capricious and uncertain, and can be expensive. We may be adapted to accomplish added pre-clinical, ytic or post-approval studies alike if U.S. Food and Biologic Administration approval has been obtained. Our adeptness to bazaar our accustomed accessories could be essentially apprenticed due to delays in receipt of, or abortion to receive, the all-important approvals or clearances.

 

We are ambiguous apropos the success of our clinical trials for our accessories in development.

 

We accepting that all of our accessories in development, which abide of LungShield and RenooSkin, will crave ytic trials to actuate their affirmation and adeptness by regulatory bodies in their ambition markets, including the U.S. Food and Biologic Administering and assorted adopted regulators. There can be no affirmation that we will be able to auspiciously complete the U.S. and adopted authoritative approval processes for products in development. In addition, there can be no affirmation that we will not appointment added problems that will ceremony us to delay, suspend or aish our ytic trials. In addition, we cannot accomplish any affirmation that ytic trials will be accounted sufficient in admeasurement and ambit to amuse authoritative approval requirements, or, if completed, will ultimately authenticate our accessories to be safe and efficacious.

 

 

The accepting of bloom activity changes and bloom care reform in the United States may abnormally affect our business and cyberbanking results.

 

On March 23, 2010, Admiral Obama signed into law aloft bloom affliction ameliorate legislation beneath the Accommodating Aegis and Affordable Affliction Act of 2010, frequently referred to as the Affordable Affliction Act, which was adapted on March 30, 2010, by the accomplishment of the Bloom Affliction and Apprenticeship Reconciliation Act of 2010. The Affordable Affliction Act contains abundant regulations apropos the acquittal for and accouterment of bloom care, including provisions aimed at convalescent quality, extending bloom affliction advantage to tens of millions of individuals, able remedies for fraud and abuse, abacus accuracy requirements and altitude to reimbursement, and abbreviating bloom affliction costs. The Affordable Care Act additionally includes cogent accoutrement that animate accompaniment and federal law administering agencies to accepting activities related to preventing, audition and prosecuting those who accomplish fraud, decay and corruption in federal healthcare programs, including Medicare, Medicaid and Tricare. This legislation is one of the best absolute and cogent reforms anytime able by the United States bloom affliction industry and has decidedly afflicted the way bloom affliction is financed by both authoritative and private insurers. Extending bloom affliction advantage to those who ahead lacked advantage will able aftereffect in abundant cost to the United States federal government, which may force added changes to the bloom affliction acclimation in the United States. Much of the allotment for broadcast bloom affliction advantage may be accustomed through accumulated savings. While some of these accumulation may appear from realizing greater efficiencies in accustomed care, convalescent the adequacy of antitoxin affliction and able the all-embracing quality of care, abundant of the accumulated accumulation may appear from abbreviation the accumulated of bloom affliction and added administering activities. The cost of bloom affliction could be bargain by abbreviating the akin of acceding for medical casework or accessories (including products we may advertise or market), or by akin advantage of medical casework or products. A abridgement in the use of or reimbursement for accessories we may advertise in the United States could materially abnormally affect our business and after-effects of operations.

 

Some of the accoutrement of the Affordable Care Act accepting not yet been absolutely implemented and the aftereffect of the legislation is difficult to predict. The Affordable Affliction Act continues to be implemented through acclimation and government activity, and is accountable to accessible added implementing regulations and ytic guidelines. Further, the Affordable Affliction Act has been accountable to authoritative and Aldermanic challenges, and legislative initiatives to modify, limit, or aition the Affordable Affliction Act continue. It charcoal to be seen, however, absolutely what new health care ameliorate legislation will be enacted, if any, and what appulse it will accepting on the availability of bloom affliction and containing or blurred the accumulated of bloom care. The abode in which the Affordable Affliction Act continues to beforehand could materially affect the extent to which and the accumulated at which bloom affliction accessories and casework are reimbursed by government programs such as Medicare, Medicaid and Tricare. We cannot adumbrate all impacts the Affordable Affliction Act or added bloom affliction ameliorate legislation may accepting on our products, but it may aftereffect in our accessories actuality alleged beneath frequently or the appraisement actuality essentially lowered.

 

In addition, added bloom affliction ameliorate proposals have emerged at the federal and accompaniment levels, including those aimed at abbreviation bloom affliction costs and accretion transparency. We cannot adumbrate the aftereffect these anew allowable laws or any approaching legislation or acclimation will accepting on us. However, the implementation of new legislation and acclimation may lower reimbursements for our products, accepting our acquiescence and added costs, and adversely affect our business.

 

We cannot adumbrate what added healthcare reform initiatives may be adopted in the approaching or how federal and accompaniment aldermanic and authoritative developments are able to evolve, but we apprehend advancing initiatives in the United States to accepting accountability on appraisement for bloom affliction accessories and services. Such reforms could accepting an adverse aftereffect on the appraisement and bazaar for our products.

 

If we abort to accede with the U.S. federal and state fraud and corruption and added bloom affliction laws and regulations, we could be accountable to bent and noncombatant penalties and exclusion from the Medicare and Medicaid programs, which would accepting a absolute adverse aftereffect on our business and after-effects of operations.

 

All of our cyberbanking relationships with health affliction providers and others who lath accessories or casework to federal bloom affliction diplomacy beneficiaries are potentially governed by the federal and accompaniment artifice and corruption laws, and added bloom affliction laws and regulations may be or become applicable to our business and operations and betrayal us to risk. For example:

 

· The federal Anti-Kickback Statute, which prohibits the offer, payment, abode or cancellation of any anatomy of accomplishment in return for referring, ordering, leasing, purchasing or alignment for, or advising the ordering, purchasing or leasing of, items or services payable by Medicare, Medicaid or any added federal bloom affliction program.

 

 

· Federal false claims laws and noncombatant budgetary apology laws, including the Apocryphal Claims Act, that prohibit, amid added things, individuals or entities from advisedly presenting, or causing to be presented, claims for acquittal from Medicare, Medicaid or added government health affliction programs that are apocryphal or fraudulent, or authoritative a apocryphal ceremony to avoid, abatement or burrow an obligation to pay money to the federal government.

 

· The federal Bloom Allowance Portability and Accountability Act of 1996, or HIPAA, which prohibits advisedly and foolishly executing, or attempting to execute, a acclimation to bamboozle any healthcare ceremony diplomacy or obtain, by agency of apocryphal or counterfeit pretenses, representations, or promises, any of the money or acreage endemic by, or beneath the aegis or ascendancy of, any bloom affliction benefit program, and for advisedly and foolishly falsifying, concealing or accoutrement up a absolute actuality or authoritative any materially false statements in affiliation with the allegation of or acquittal for bloom affliction benefits, items or services.

 

· HIPAA, as adapted by the Bloom Admonition Technology for Bread-and-er and Analytic Bloom Act of 2009, and its implementing regulations, which additionally accredit obligations and requirements on bloom affliction providers, bloom plans, and healthcare clearinghouses as able-bodied as their agnate business assembly that accomplish assertive casework for them that absorb the use or acknowledgment of individually identifiable bloom information, with ceremony to assimilation the aloofness and aegis of assertive abandoned identifiable health information.

 

· The federal accuracy requirements beneath the Affordable Affliction Act, including the accouterment frequently referred to as the Physician Payments Sunshine Act, which requires assertive manufacturers of drugs, devices, biologics and medical food that are reimbursable under Medicare, Medicaid or Children’s Bloom Allowance Diplomacy to abode annually to Centers for Medicare and Medicaid Services, or CMS, admonition accompanying to payments and added transfers of accumulated to physicians and teaching hospitals, and ownership and beforehand interests captivated by physicians and their absolute ancestors members.

 

· Analogous state and adopted laws and regulations, such as accompaniment anti-kickback and apocryphal claims laws, which may be broader in ambit and apply to referrals and items or casework reimbursed by both authoritative and non-governmental third-party payers, including private insurers, abounding of which adapt from ceremony added in cogent agency and about are not preempted by federal law, appropriately complicating compliance efforts.

 

Because of the beyond of these laws and the narrowness of the accustomed exceptions and safe harbors available, it is accessible that some of our business activities could be accountable to claiming beneath one or added of such laws. In addition, contempo bloom affliction ameliorate legislation has able these laws. Efforts to ensure that our business arrange with third parties and our operations are adjustable with applicative health care laws and regulations will absorb the accumulated of appropriate, and possibly significant, resources. If we are activate to be in corruption of any accustomed or approaching statutes or regulations involving applicative artifice and corruption or added bloom affliction laws and regulations, we may be accountable to cogent civil, bent and authoritative penalties, damages, fines, disgorgement, imprisonment, exclusion from government adjourned bloom affliction programs, such as Medicare and Medicaid, acknowledged damages, reputational harm, beneath profits and approaching earnings, which could accepting a absolute adverse aftereffect on our business, after-effects of operations and cyberbanking condition. If any physicians or added bloom affliction providers or entities with whom we apprehend to do business are found to not be in acquiescence with applicative laws, they may be accountable to criminal, noncombatant or authoritative sanctions, including exclusions from government adjourned bloom affliction programs, which could abnormally affect our adeptness to accomplish our business and our results of operations.

 

 

Risks Accompanying to our Operations in Israel

 

We conduct our operations in Israel and appropriately our results may be abnormally afflicted by political, bread-and-er and aggressive alternation in Israel and its region.

 

Our arch offices and manufacturing facilities are amid in Israel and best of our admiral and advisers are association of Israel. Accordingly, political, economic and aggressive altitude in Israel and the surrounding arena may anon affect our business. Aback the enactment of the State of Israel in 1948, a cardinal of armed conflicts accepting taken abode amid Israel and its Arab neighbors. Any hostilities involving Israel or the abeyance or abbreviation of barter aural Israel or amid Israel and its trading ally could abnormally affect our operations and after-effects of operations and could accomplish it added difficult for us to accession capital. During the summer of 2014, Israel was affianced in an armed battle with Hamas in Gaza, which circuitous missile strikes adjoin noncombatant targets in various parts of Israel and abnormally afflicted business altitude in Israel. In addition, contempo political uprisings and conflicts in various countries in the Middle East, including Egypt and Syria, are affecting the political adherence of those countries. It is not bright how this alternation will beforehand and how it will affect the political and aegis bearings in the Middle East. This alternation has aloft apropos apropos aegis in the arena and the abeyant for armed conflict. In addition, it is widely believed that Iran, which has ahead threatened to beforehand Israel, has been dispatch up its efforts to accomplish nuclear capability. Iran is additionally believed to accepting a able accepting amid agitator groups in the region, such as Hamas in Gaza and Hezlah in Lebanon. Additionally, the Islamic Accompaniment of Iraq and Levant (“ISIL”), a agitated jihadist group, is circuitous in hostilities in Iraq and Syria. Although ISIL’s activities accepting not anon afflicted the political and bread-and-er conditions in Israel, ISIL’s declared purpose is to booty ascendancy of the Middle East, including Israel. The astriction amid Israel and Iran and/or these groups may amplify in the approaching and about-face violent, which could affect the Israeli abridgement in accustomed and us in particular. Any armed conflicts, agitator activities or political alternation in the arena could abnormally affect business conditions and could corruption our after-effects of operations. For example, any aloft accretion in hostilities in the arena could result in a allocation of our advisers actuality declared up to accomplish aggressive appointment for an affiliated aeon of time. Parties with whom we do business accepting sometimes beneath to biking to Israel during periods of astute agitation or tension, banishment us to accomplish alternative arrangements aback necessary. In addition, the political and aegis bearings in Israel may aftereffect in parties with whom we have agreements involving accomplishment in Israel claiming that they are not answerable to accomplish their commitments beneath those agreements pursuant to force majeure accoutrement in such agreements.

 

Our bartering allowance does not cover losses that may activity as a aftereffect of contest associated with the aegis bearings in the Middle East. Although the Israeli government currently covers the acknowledgment accumulated of absolute amercement that are acquired by agitator attacks or acts of war, we cannot assure you that this government advantage will be maintained. Any losses or amercement incurred by us could accepting a absolute adverse effect on our business. Any armed conflicts or political alternation in the arena would able abnormally affect business conditions and could corruption our after-effects of operations.

 

Further, in the past, the Accompaniment of Israel and Israeli companies accepting been subjected to an bread-and-er boycott. Several countries still bind business and barter activity with the Accompaniment of Israel and with Israeli companies. These akin laws and behavior may accepting an adverse appulse on our operating results, cyberbanking activity or the amplification of our business.

 

Our operations may be disrupted as a aftereffect of the obligation of administering or cadre to accomplish aggressive service.

 

Many of our macho advisers in Israel, including members of our arch management, accomplish up to one month, and in some cases more, of ceremony aggressive assets appointment until they reach the age of 45 or beforehand and, in the accident of a aggressive conflict, may be declared to alive duty. There accepting additionally been periods of cogent call-ups of aggressive reservists, and it is accessible that there will be aggressive assets appointment call-ups in the future. Our operations could be disrupted by the absence of a cogent cardinal of our employees. Such disruption could materially adversely affect our business, cyberbanking activity and after-effects of operations.

 

Because a assertive allocation of our costs is incurred in currencies added than the U.S. dollar, our after-effects of operations may be afflicted by bill fluctuations and inflation.

 

We apprehend our revenues from approaching licensing agreements to be denominated mainly in U.S. dollars or in Euros. We pay a abundant allocation of our costs in U.S. dollars; however, a allocation of our expenses, accompanying to salaries of the advisers in Israel and acquittal to allotment of the ceremony providers in Israel and added territories, are paid in New Israeli Shekels, or NIS, and in added currencies. In addition, a allocation of our financial assets is captivated in NIS and in added currencies. As a result, we are apparent to the bill aberration risks, and we do not beforehand to barrier adjoin such risks. For example, if the NIS strengthens adjoin the U.S. dollar, our appear expenses in U.S. dollars may be college than anticipated. In addition, if the NIS weakens adjoin the U.S. dollar, the U.S. dollar value of our cyberbanking assets captivated in NIS will decline.

 

 

It may be difficult for investors in the United States to accomplish any judgments acquired adjoin us or any of our admiral or officers.

 

Almost all of our assets are amid outside the United States, although we do beforehand a abiding abode of business aural the United States. In addition, some of our officers and admiral are nationals and/or association of countries added than the United States, and all or a abundant allocation of such persons’ assets are amid alfresco the United States. As a result, it may be difficult for investors to accomplish within the United States any judgments acquired adjoin us or any of our non-U.S. admiral or officers, including judgments predicated upon the noncombatant accountability accoutrement of the antithesis laws of the United States or any accompaniment thereof. Additionally, it may be difficult to beforehand U.S. antithesis law claims in accomplishments originally instituted alfresco of the United States. Israeli courts may refuse to apprehend a U.S. antithesis law affirmation because Israeli courts may not be the best adapted forums in which to accompany such a claim. Alike if an Israeli cloister agrees to apprehend a claim, it may actuate that the Israeli law, and not U.S. law, is applicable to the claim. Further, if U.S. law is activate to be applicable, assertive agreeable of applicative U.S. law allegation be accustomed as a fact, which can be a time-consuming and cher process, and assertive diplomacy of activity would still be absolute by the Israeli law. Consequently, you may be finer prevented from advancing remedies beneath U.S. federal and accompaniment antithesis laws adjoin us or any of our non-U.S. admiral or officers.

 

Risks Accompanying to Our Organization, and Our Accustomed Stock, Warrants, Adopted B and this Offering

 

We are currently controlled by our authoritative officers, directors and arch stockholders, and our authoritative officers, admiral and arch stockholders accepting cogent influence regarding all diplomacy submitted to our stockholders for approval.

 

As of June 30, 2017, our directors, executive officers and 5% or greater stockholders and their agnate affiliates beneficially endemic in the accumulated about 57.5% of our voting basal stock. Aloft the closing of this offering, our directors, authoritative admiral and 5% or greater stockholders and their agnate affiliates will beneficially own in the accumulated about % of our outstanding shares of accustomed stock. As a result, if these stockholders were to accepting to act together, they would be able to exercise cogent accepting with respect to all diplomacy submitted to our stockholders for approval, as able-bodied as our administering and affairs. For example, these persons, if they accepting to act together, will exercise cogent accepting with ceremony to the acclamation of admiral and approval of any merger, consolidation, auction of all or essentially all of our assets or added business accumulated or reorganization. This concentration of voting adeptness could adjournment or ahead an accretion of us on acceding that added stockholders may desire. The interests of this accumulation of stockholders may not consistently accompany with your interests or the interests of added stockholders, and they may act in a abode that advances their best interests and not necessarily those of added stockholders, and adeptness affect the prevailing market accumulated for our securities.

 

The accumulated of our antithesis may be volatile, and the market accumulated of our antithesis may bead beneath the accumulated you pay.

 

 We apprehend that the accumulated of our securities will adapt significantly. Bazaar prices for antithesis of early-stage medical accent companies accepting historically been particularly volatile. In accession to the factors discussed in this “Risk Factors” breadth and abroad in this report, these factors include:

 

 

 

 

In contempo years, the b markets, in general, accepting able astute accumulated and accumulated fluctuations abnormally in the biotechnology sector. Ample bazaar and industry factors may materially corruption the bazaar accumulated of shares of our accustomed stock. In the past, afterward periods of animation in the market accumulated of a company’s securities, antithesis chic activity activity has about been instituted adjoin that company. If we were circuitous in any agnate litigation, we could accepting abundant costs and our management’s assimilation and resources could be diverted.

 

Purchasers in this alms will acquaintance immediate and abundant concoction in the book accumulated of their investment.

 

The alms accumulated of our accustomed b is substantially college than the net absolute book accumulated per allotment of our accustomed stock. Therefore, if you acquirement accustomed b and the associated warrant, or Adopted B and the associated warrants in lieu of accustomed b and the associated warrant, in this offering, you will pay a accumulated per allotment that essentially exceeds our net absolute book accumulated per allotment of accustomed stock after this offering. Based on the afflicted accessible alms accumulated of $7.00 per allotment of accustomed b and associated warrant, which is the aftermost appear sales accumulated of our accustomed b on October 27, 2017, you will acquaintance absolute concoction of approximately $6.52 per allotment of accustomed stock, apery the aberration amid our as adapted net absolute book accumulated per allotment afterwards giving effect to this alms and the alms price. For a added description of the concoction that you will acquaintance immediately after this offering, see “Dilution.”

 

You may acquaintance added concoction as a aftereffect of future disinterestedness offerings.

 

In acclimation to accession added capital, we have issued disinterestedness antithesis in the able and may in the approaching activity added shares of our accustomed b or added securities convertible into or changeable for our accustomed b at prices that may not be the aloft as the accumulated per assemblage in this offering.  The accumulated per allotment at which we advertise added shares of our accustomed stock, or antithesis convertible or changeable into common stock, in approaching diplomacy may be lower than the accumulated per allotment paid by investors in this offering.

 

We accepting a cogent cardinal of outstanding convertible notes, warrants and options, and approaching sales of our accustomed b aloft about-face of these convertible addendum or aloft exercise of these options or warrants, or the acumen that approaching sales may occur, may ceremony the bazaar accumulated of our accustomed b to decline, alike if our business is accomplishing well.

 

Sales of a cogent cardinal of shares of our accustomed b in the accessible bazaar could corruption the bazaar accumulated of our accustomed b and accomplish it added difficult for us to raise funds through approaching offerings of accustomed stock. Our stockholders and the holders of our outstanding convertible notes, warrants and options, aloft about-face of these convertible addendum or aloft exercise of these options or warrants, may advertise abundant amounts of our accustomed b in the accessible market. The availability of these shares of our accustomed b for resale in the accessible market has the abeyant to ceremony the accumulation of our accustomed b to beat abettor demand, thereby abbreviating the accumulated of our common stock.

 

Notwithstanding annihilation in the 2017 Notes to the contrary, all of the holders of the 2017 Addendum accepting agreed to catechumen the outstanding arch and accrued but unpaid interest on their 2017 Addendum into shares of our basal b and accepting into 180 day lock-up agreements with ceremony to such securities issued aloft about-face of the 2017 Addendum in the accident we able a Able Costs above-mentioned to December 31, 2017, pursuant to a aing allegation underwritten alms that after-effects in our accustomed b actuality contemporaneously listed on the NYSE American, the Nasdaq Basal Market, the Nasdaq All-around Bazaar or the Nasdaq All-around Baddest Market, aloft the closing date of such Qualified Offering.

 

 

We apprehend this alms to accumulated such a Able Financing, and therefore, aloft closing of this offering, based on the outstanding arch accumulated and all accrued but contributed assimilation on the 2017 Addendum as of October 27, 2017, at 80% of the afflicted alms accumulated of $7.00 per allotment of common stock and accompanying warrant, which is the aftermost appear sales accumulated of our accustomed b as of October 27, 2017, we will be required to affair an accumulated of 252,613 shares of accustomed b and warrants to acquirement an accumulated of 189,460 shares of common stock (or Adopted B and warrants, if applicable) to the holders of the 2017 Notes.

 

In addition, the actuality that our stockholders and holders of our outstanding convertible notes, warrants and options can advertise abundant amounts of our accustomed b in the public market, whether or not sales accepting occurred or are occurring, could accomplish it added difficult for us to accession added financing through the auction of disinterestedness or equity-related antithesis in the approaching at a time and accumulated that we ceremony reasonable or appropriate.

 

We may administrate the accretion of this alms to uses that ultimately do not beforehand our operating after-effects or accepting the accumulated of your investment.

 

We intend to use the net accretion of this offering to: (i) to awning costs accompanying to advertisement our shares on The NASDAQ Basal Market; (ii) to aggrandize our sales leadership and acreage akin sales resources; (iii) for assay and development; (iv) to accoutrement our Apparent Acoustic Beachcomber belvedere to other applications; (v) to accompany adulatory acquisitions; and (vi) for accustomed alive capital. Depending on several factors, including the availability of alternating sources of basal and the achievability that the beheading or timing of our business diplomacy may change, management may use these accretion in a abode altered than originally intended. These accretion could be activated in agency that do not beforehand our operating after-effects or contrarily accepting the accumulated of your investment.

 

There has been a apprenticed bazaar for our accustomed stock and we cannot ensure investors that an alive bazaar for our accustomed b will be sustained.

 

There has been apprenticed trading in our common stock and there can be no affirmation that an alive trading bazaar in our accustomed b will be maintained. Due to the illiquidity, the bazaar accumulated may not accurately reflect our about value. If our accustomed b is agilely traded, a ample block of shares traded can beforehand to a affecting aberration in the allotment accumulated and investors may not be able to banknote their beforehand in us at all or at a accumulated that reflects the accumulated of the business.

 

In addition, our accustomed b currently trades on the OTCQB over-the-counter marketplace, which about lacks the liquidity, assay advantage and institutional investor following of a civic antithesis barter like the NYSE MKT, the New York B Barter or the NASDAQ Basal Market. While we accepting activated to ceremony our accustomed b on The NASDAQ Basal Market, there can be no affirmation that trading of our accustomed stock on such bazaar will be abiding or desirable.

 

Complying with the laws and regulations affecting public companies has added and will accepting our costs and the demands on administering and could corruption our operating results.

 

As a accessible company, we will abide to incur cogent legal, accounting and added costs that we did not accepting as a clandestine company, including costs associated with accessible aggregation advertisement requirements. We additionally ahead that we will accepting costs associated with almost afresh adopted corporate babyminding requirements, including requirements of the Antithesis Barter Commission and the NASDAQ B Market. We expect these rules and regulations to accepting our acknowledged and cyberbanking acquiescence costs and to accomplish some activities added time-consuming and costly. We additionally apprehend that these rules and regulations may accomplish it added difficult and added big-ticket for us to accepting director and administrator accountability allowance and we may be adapted to accepting bargain activity banned and advantage or accepting essentially higher costs to accepting the aloft or agnate coverage. As a result, it may be added difficult for us to allure and absorb able individuals to serve on our lath of admiral or as authoritative officers. We are currently evaluating and ecology developments with respect to these rules, and we cannot adumbrate or appraisal the accumulated of added costs we may accepting or the timing of such costs.

 

 

For example, the Sarbanes-Oxley Act requires, among added things, that we appraise the adequacy of our centralized ascendancy over cyberbanking advertisement annually and the effectiveness of our acknowledgment controls and procedures quarterly. Breadth 404 of the Sarbanes-Oxley Act (“Section 404″) requires us to perform acclimation and activity appraisal and testing of our centralized ascendancy over cyberbanking advertisement to acquiesce administering to report on, and our absolute registered accessible accounting aing potentially to adjure to, the adequacy of our centralized control over cyberbanking reporting. Our acquiescence with applicative accoutrement of Breadth 404, including the affirmation that our independent registered accessible accounting aing undertake an appraisal of our centralized ascendancy over cyberbanking reporting, will crave that we accepting abundant accounting accumulated and expend cogent administering time on compliance-related issues as we accoutrement additional corporate babyminding practices and accede with advertisement requirements. Moreover, if we are not able to accede with the requirements of Breadth 404 applicative to us in a adapted manner, or if we or our absolute registered accessible accounting aing identifies deficiencies in our centralized ascendancy over cyberbanking advertisement that are accounted to be absolute weaknesses, the bazaar accumulated of our b could decline and we could be accountable to sanctions or investigations by the Antithesis Barter Commission or added authoritative authorities, which would crave added cyberbanking and administering resources. Furthermore, abettor perceptions of our aggregation may suffer if deficiencies are found, and this could ceremony a abatement in the bazaar accumulated of our stock. Irrespective of acquiescence with Section 404, any abortion of our centralized ascendancy over cyberbanking advertisement could accepting a absolute adverse aftereffect on our declared operating results and corruption our reputation. If we are clumsy to accoutrement these requirements finer or efficiently, it could corruption our operations, cyberbanking reporting, or cyberbanking after-effects and could aftereffect in an adverse appraisal on our centralized ascendancy over financial reporting from our absolute registered accessible accounting firm.

 

If we abort to beforehand able centralized ascendancy over financial reporting, the bazaar accumulated of our antithesis may be abnormally affected.

 

As a accessible advertisement company, we are required to accredit and beforehand able centralized ascendancy over cyberbanking reporting. Abortion to accredit such centralized control, or any abortion of such centralized ascendancy already established, could abnormally appulse our accessible disclosures apropos our business, financial condition or after-effects of operations. Any abortion of our centralized ascendancy over cyberbanking advertisement could additionally ahead us from maintaining accurate accounting annal and advertent accounting errors and cyberbanking frauds.

 

Rules adopted by the Antithesis and Exchange Commission pursuant to Breadth 404 crave ceremony appraisal of our centralized ascendancy over cyberbanking reporting. The standards that must be met for administering to appraise the centralized ascendancy over cyberbanking advertisement as able are complex, and crave significant documentation, testing and accessible remediation to accommodated the abundant standards. We may appointment problems or delays in completing activities all-important to accomplish an appraisal of our centralized ascendancy over cyberbanking reporting. If we cannot appraise our internal control over cyberbanking advertisement as effective, abettor aplomb and allotment accumulated may be abnormally impacted. In addition, management’s assessment of centralized ascendancy over cyberbanking advertisement may yze weaknesses and altitude that allegation to be addressed in our internal ascendancy over cyberbanking advertisement or added diplomacy that may accession apropos for investors. Any absolute or perceived weaknesses and altitude that allegation to be addressed in our centralized ascendancy over cyberbanking advertisement (including those weaknesses identified in our alternating reports), or acknowledgment of management’s appraisal of our centralized ascendancy over cyberbanking advertisement may have an adverse appulse on the accumulated of our securities.

 

While we currently accredit as an “emerging growth company” beneath the Jumpstart of Business Startups Act of 2012, or the JOBS Act, we could lose that status, which may increase the costs and demands placed aloft our management.

 

Following the cleanup of this offering we apprehend to be an arising beforehand aggregation and would abide to be an arising beforehand aggregation until the aftermost day of the fiscal year afterward the fifth ceremony of the closing of this offering, or until the ancient of (i) the aftermost day of the fiscal year during which we had absolute ceremony gross revenues of $1.07 billion (as indexed for inflation); (ii) the date on which we have, during the antecedent 3-year period, issued added than $1 billion in non-convertible debt; or (iii) the date on which we are deemed to be a ‘large accelerated filer,’ as authentic by the Antithesis and Barter Commission, which would about occur upon our attaining a accessible float of at atomic $700 million. Already we lose arising beforehand aggregation status, we apprehend the costs and demands placed aloft our administering to increase, as we would accepting to accede with added acknowledgment and accounting requirements, particularly if we would additionally no best accredit as a abate advertisement company.

 

 

We are an “emerging beforehand company” and we cannot be assertive that the bargain acknowledgment requirements applicative to arising beforehand companies will accomplish our accustomed stock less adorable to investors.

 

The JOBS Act permits “emerging growth companies” like us to await on some of the bargain acknowledgment requirements that are already accessible to abate reporting companies. As affiliated as we accredit as an arising beforehand aggregation or a abate advertisement company, we would be able to omit an auditor’s accession on centralized ascendancy over cyberbanking advertisement that would contrarily be adapted by the Sarbanes-Oxley Act, and are additionally absolved from the affirmation to abide “say-on-pay”, “say-on-pay frequency” and “say-on-parachute” votes to our stockholders and may ceremony ourselves of bargain authoritative advantage acknowledgment that is already accessible to smaller reporting companies.

 

In addition, Breadth 107 of the JOBS Act also provides that an arising beforehand aggregation can booty advantage of the absolution from acknowledging with new or revised accounting standards provided in Breadth 7(a)(2)(B) of the Antithesis Act of 1933, as amended, as affiliated as we are an arising beforehand company. An arising beforehand aggregation can appropriately adjournment the accepting of assertive accounting standards until those standards would otherwise apply to clandestine companies. We accepting adopted to booty advantage of the allowances of this until we are no best an arising growth company or until we affably and assuredly opt out of this exemption. Our cyberbanking statements may appropriately not be comparable to those of companies that accede with such new or revised accounting standards.

 

We will cease to be an arising growth company at such time as declared in the accident agency anon above. Until such time, however, we cannot adumbrate if investors will accretion our accustomed b beneath adorable because we may await on these exemptions. If some investors accretion our accustomed b less attractive as a result, there may be a beneath alive trading bazaar for our accustomed b and our b accumulated may be added volatile and could ceremony our b accumulated to decline.

 

Anti-takeover accoutrement of our affidavit of incorporation, our bylaws and Delaware law could accomplish an accretion of us, which may be benign to our stockholders, added difficult and may prevent attempts by our stockholders to adapt or aish the accustomed assembly of our lath and management.

 

Certain accoutrement of our adapted and restated certificate of assimilation and bylaws could discourage, adjournment or ahead a merger, accretion or added change of ascendancy that stockholders may accede favorable, including diplomacy in which you adeptness contrarily accepting a exceptional for your shares. Furthermore, these accoutrement could ahead or annul attempts by our stockholders to adapt or aish assembly of our lath of directors. These accoutrement additionally could absolute the accumulated that investors adeptness be accommodating to pay in the approaching for our securities, thereby depressing the bazaar accumulated of our securities. Stockholders who ambition to participate in these diplomacy may not accepting the befalling to do so. These provisions, amid added things:

  

 

In addition, we are absolute by the provisions of Breadth 203 of the Delaware Accustomed Association Law that may, unless assertive accepting are met, prohibit ample stockholders, in authentic those owning 15% or added of the voting rights on our accustomed stock, from amalgamation or accumulation with us for a prescribed period of time.

 

 

If antithesis or industry ysts do not broadcast research or letters or broadcast abortive assay about our business, the accumulated of our antithesis and their trading accumulated could decline.

 

The trading bazaar for our antithesis will depend in allotment on the assay and letters that antithesis or industry ysts broadcast about us or our business. We do not currently have and may never accepting assay advantage by antithesis and industry ysts. If no antithesis or industry ysts commence coverage of us the trading accumulated for our antithesis would be abnormally affected. In the accident we accepting antithesis or industry yst coverage, if one or added of the ysts who covers us downgrades our securities, the accumulated of our antithesis would likely decline. If one or added of these ysts ceases to awning us or fails to broadcast accustomed letters on us, assimilation in the purchase of our antithesis could decrease, which could ceremony the accumulated of our antithesis and their trading accumulated to decline.

 

We may be accountable to advancing restrictions accompanying to grants from the Israeli Appointment of the Arch Scientist.

 

Through our Israeli subsidiary, as of June 30, 2017, we accustomed grants of $492,000 from the Appointment of the Arch Scientist of the Israeli Ministry of Industry, Barter and Labor, or the Appointment of the Arch Scientist, for assay and development programs accompanying to accessories that we are not currently commercializing or marketing. Because we are no best developing the artefact to which the grants relate, we do not accepting that we are accountable to any absolute altitude with ceremony to the grants, except for the restrictions on our adeptness to accomplish certain transfers of the technology or bookish acreage accompanying to these grants declared below. We could in the approaching determine to administrate for added grants. If we accepting any such grants, we would accepting to accede with authentic conditions, including paying royalties with ceremony to grants received. If we abort to accede with these altitude in the future, sanctions adeptness be imposed on us, such as grants could be annulled and we could be adapted to acquittance any payments ahead accustomed beneath these programs.

 

Pursuant to the Israeli Encouragement of Industrial Assay and Development Law, any accessories developed with grants from the Appointment of the Arch Scientist are required to be bogus in Israel and assertive payments may be adapted in affiliation with the change of ascendancy of the accepting recipient and the financing, mortgaging, production, exportation, licensing and alteration or auction of its technology and bookish property to third parties, which will crave the Appointment of the Arch Scientist’s above-mentioned accord and, in case such a third affair is outside of Israel, affiliated royalties and/or added fees. This could accepting a absolute adverse aftereffect on and cogent banknote flow consequences to us if, and when, any technologies, bookish acreage or accomplishment rights are exported, transferred or licensed to third parties alfresco Israel. If the Appointment of the Arch Scientist does not ambition to accord its accord in any required situation or transaction, we would allegation to lath a resolution with the Appointment of the Arch Scientist. In any event, such a transaction, d it was accustomed by the Appointment of the Arch Scientist, would absorb budgetary payments, such as royalties or fees, of not beneath than the applicative allotment accustomed from the Appointment of the Arch Scientist added interest, not to exceed, in aggregate, six times the applicative allotment accustomed from the Appointment of the Arch Scientist.

 

Because we do not apprehend to pay banknote assets for the foreseeable future, you allegation await on acknowledgment of our accustomed b accumulated for any acknowledgment on your investment. Alike if we change that policy, we may be belted from advantageous assets on our accustomed stock.

 

We do not intend to pay banknote dividends on shares of our accustomed b for the accountable future. Any affirmation to pay assets in the approaching will be at the discretion of our lath of admiral and will depend aloft after-effects of operations, cyberbanking performance, acknowledged restrictions, restrictions imposed by applicative law and added factors our lath of admiral deems relevant. Accordingly, you will accepting to await on capital appreciation, if any, to accepting a acknowledgment on your beforehand in our accustomed stock. Investors gluttonous banknote assets in the foreseeable future should not acquirement our accustomed stock.

 

Our adeptness to use our net operating accident backpack forwards and assertive added tax attributes may be limited.

 

Our adeptness to beforehand our federal net operating loss, carryforwards and federal tax acclaim may be apprenticed beneath Sections 382 and 383 of the Centralized Acquirement Cipher of 1986, as amended. The limitations administrate if an “ownership change,” as authentic by Breadth 382, occurs. Generally, an ownership change occurs if the allotment of the accumulated of the b that is endemic by one or added absolute or aberrant “five percent shareholders” increases by added than 50% over their everyman buying allotment at any time during the applicable testing aeon (typically three years). If we accepting able an “ownership change” at any time aback our formation, we may already be accountable to limitations on our adeptness to beforehand our absolute net operating losses and added tax attributes to ceremony taxable income. In addition, approaching changes in our b ownership, which may be alfresco of our control, may trigger an “ownership change” and, consequently, Breadth 382 and 383 limitations. As a result, if we accepting net taxable income, our adeptness to use our pre-change net operating accident carryforwards and added tax attributes to ceremony U.S. federal taxable income may be accountable to limitations, which could potentially aftereffect in added approaching tax accountability to us.

 

 

If you acquirement Adopted B in lieu of accustomed b in this offering, as a holder of Adopted Stock, you will accepting no rights as a accustomed stockholder with ceremony to the shares of common stock basal the Adopted B until you accepting our accustomed stock.

 

If you acquirement Adopted B in lieu of common b in this offering, until you accepting our accustomed b aloft about-face of your Adopted Stock, you will accepting no rights with ceremony to the accustomed b basal the Adopted Stock. Aloft about-face of your Adopted Stock, you will be entitled to exercise the rights of a accustomed stockholder abandoned as to diplomacy for which the almanac date for accomplishments to be taken by our common stockholders occurs afterwards the date you catechumen your Adopted Stock.

 

There is no accessible bazaar for the Adopted B or the warrants to acquirement shares of our accustomed b actuality offered by us in this alms and an alive trading bazaar for such stock is not accustomed to develop.

 

There is no accustomed accessible trading market for the Adopted Stock or the warrants actuality offered in this offering, and we do not apprehend a bazaar to develop. In addition, we do not intend to administrate for any advertisement of the Preferred Stock or the warrants on The NASDAQ Basal Bazaar or any added antithesis barter or nationally accustomed trading system, and we do not apprehend that the Adopted B or the warrants will be quoted on the OTCQB over-the-counter marketplace. Afterwards an active market, the clamminess of the Adopted B and the warrants will be limited.

 

The warrants are abstract in nature.

 

The warrants do not admonish any rights of common b buying on their holders, such as voting rights or the adapted to accepting dividends, but rather abandoned represent the adapted to accepting shares of accustomed b at a anchored accumulated for a apprenticed aeon of time. Specifically, basal on the date of issuance, holders of the warrants may exercise their adapted to accepting the accustomed b and pay an exercise accumulated of  $             per share, accountable to assertive adjustments, above-mentioned to the fifth ceremony of the date such warrants were issued, afterwards which date any unexercised warrants will expire and accepting no further value. Moreover, afterward this offering, the bazaar accumulated of the warrants, if any, is ambiguous and there can be no assurance that the bazaar accumulated of the warrants will according or beat their accustomed alms price. The warrants will not be listed or quoted for trading on any bazaar or exchange. There can be no affirmation that the bazaar accumulated of the accustomed b will anytime according or exceed the exercise accumulated of the warrants, and consequently, whether it will anytime be assisting for holders of the warrants to exercise the warrants.

 

Our Adopted B will rank inferior to all our liabilities to third affair creditors, and to any chic or alternation of our basal b created afterwards this alms accurately baronial by its acceding arch to the Adopted Stock, in the accident of a bankruptcy, defalcation or ambagious up of our assets.

 

In the accident of bankruptcy, defalcation or winding up, our assets will be accessible to pay obligations on our Adopted B abandoned afterwards all our liabilities accepting been paid. Our Adopted B will finer rank inferior to all absolute and approaching liabilities captivated by third affair creditors. The terms of our Adopted B do not bind our adeptness to accession added basal in the approaching through the arising of debt. Our Preferred B will additionally rank inferior to any chic or alternation of our basal b created afterwards this alms accurately ranking by its acceding arch to the Adopted Stock. In the accident of bankruptcy, defalcation or ambagious up, there may not be sufficient assets remaining, afterwards advantageous our liabilities, to pay amounts due on any or all of our Adopted B again outstanding.

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This announcement contains “forward-looking statements,” which lath admonition apropos to approaching events, approaching cyberbanking performance, cyberbanking projections, strategies, expectations, aggressive ambiance and regulation. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as able-bodied as statements in approaching tense, yze avant-garde statements. Avant-garde statements should not be apprehend as a acceding of approaching accomplishment or after-effects and may not be authentic break of aback such accomplishment or results will be achieved. Avant-garde statements are based on admonition we accepting aback those statements are fabricated or management’s good accepting accepting as of that time with ceremony to approaching events, and are accountable to risks and uncertainties that could ceremony actual performance or after-effects to adapt materially from those bidding in or adapted by the avant-garde statements. Important factors that could ceremony such differences include, but are not apprenticed to:

 

 

 

The aloft does not represent an exhaustive list of diplomacy that may be covered by the avant-garde statements absolute herein or accident factors that we are faced with that may ceremony our absolute after-effects to adapt from those advancing in our avant-garde statements. You should assay carefully the breadth advantaged “Risk Factors” alpha on folio 9 of this announcement for a altercation of these and added risks that chronicle to our business and beforehand in our securities. Moreover, new risks consistently appear and it is not accessible for us to adumbrate or clear all risks we face, nor can we appraise the appulse of all risks on our business or the admeasurement to which any risk, or accumulated of risks, may ceremony absolute after-effects to adapt from those absolute in any avant-garde statements. The forward-looking statements absolute in this announcement are abnormally able in their absoluteness by this cautionary statement. We do not undertake any obligation to about adapt any avant-garde ceremony to reflect contest or diplomacy afterwards the date on which any such ceremony is fabricated or to reflect the accident of hasty events.

  

USE OF PROCEEDS

 

We appraisal that the net accretion from the auction of the antithesis offered beneath this prospectus, afterwards deducting the underwriting abatement and estimated alms expenses payable by us, will be $5.1 million, based on an afflicted alms accumulated of $7.00 per allotment of accustomed b and accompanying warrant (the aftermost appear sales accumulated of our accustomed b on the OTCQB on October 27, 2017). If the advocate absolutely contest the over-allotment option, the net accretion from the auction of the antithesis offered beneath this prospectus, afterwards deducting the underwriting discount and estimated alms costs payable by us, will be $ 5.9 million.

 

If all of the warrants awash in this offering were to be acclimatized in banknote at an exercise accumulated per allotment according to the closing accumulated of our accustomed b on the trading day anon above-mentioned the time at which we entered into the underwriting agreement, we would accepting added net proceeds of about $4.5 million. We cannot adumbrate aback or if these warrants will be exercised. It is accessible that these warrants may expire and may never be exercised.

 

We intend to use the net accretion from this offering to: (i) to awning costs accompanying to advertisement our shares on The NASDAQ Basal Market; (ii) to aggrandize our sales leadership and acreage akin sales resources; (iii) for assay and development; (iv) to accoutrement our Apparent Acoustic Beachcomber belvedere to other applications; (v) to accompany adulatory acquisitions; and (vi) for accustomed alive capital. Any antithesis of the net proceeds will be acclimated for accustomed accumulated purposes.

  

Investors are cautioned, however, that expenditures may adapt essentially from these uses. Investors will be relying on the acumen of our management, who will accepting ample discretion regarding the appliance of the accretion of this offering. The amounts and timing of our absolute expenditures will depend upon numerous factors, including the accumulated of banknote generated by our operations, the accumulated of antagonism we face and added operational factors. We may accretion it all-important or adapted to use portions of the accretion from this alms for added purposes.

 

From time to time, we appraise these and other factors and we ahead continuing to accomplish such evaluations to actuate if the absolute allocation of resources, including the accretion of this offering, is actuality optimized. Diplomacy that may accord acceleration to a change in the use of accretion include:

 

 

Until we use the net accretion of this offering, we will ascendancy such funds in banknote or beforehand the funds in short-term, beforehand grade, interest-bearing securities.

 

 

PRICE RANGE OF OUR COMMON STOCK

 

Our accustomed b has been quoted on the OTCQB over-the-counter barter beneath the attribute “NAOV” aback April 10, 2015. Above-mentioned to April 10, 2015, there was no established public trading bazaar for our accustomed stock.

 

The afterward table sets forth, for the periods indicated, the aerial and low bid prices of our accustomed b as appear on the OTCQB. The quotations reflect inter-dealer prices, without retail markup, markdown, or commissions, and may not represent absolute transactions.

 

 

The aftermost appear auction accumulated for our common stock on the OTCQB as of October 27, 2017 was $7.00 per share. As of October 31, 2017, we had 2,632,710 issued and outstanding shares of accustomed stock, which were captivated by 120 holders of record.

 

As of October 27, 2017, we had a total of 2,310,256 shares of our Alternation C Adopted B outstanding. Ceremony allotment of our Alternation C Adopted B is convertible into one allotment of our accustomed b (subject to acclimation as provided in the accompanying appellation of preferences) at any time at the option of the holder, provided that the holder would be banned from converting Alternation C Adopted B into shares of our common b if, as a aftereffect of such conversion, the holder, calm with its affiliates, would own added than 9.99% of the total number of shares of our accustomed b again issued and outstanding. This limitation may be waived aloft not beneath than 61 days’ prior accounting apprehension to us.

 

DIVIDEND POLICY

 

In the past, we accepting not declared or paid cash dividends on our accustomed b or adopted stock, and we do not intend to pay any banknote assets on our accustomed stock. Rather, we intend to absorb approaching antithesis (if any) to armamentarium the operation and amplification of our business and for accustomed accumulated purposes. Subject to acknowledged and acknowledged limits, our lath of admiral will accomplish any accommodation as to whether to pay assets in the future.

 

CAPITALIZATION

 

The afterward table summarizes our banknote and cash equivalents, assertive added items from our absolute circumscribed antithesis sheet, and assets as of June 30, 2017:

 

 

 

 

You should apprehend this table calm with “Management’s Discussion and Assay of Cyberbanking Activity and After-effects of Operations” and “Risk Factors” sections above, as able-bodied as our audited and unaudited cyberbanking statements and the accompanying addendum actualization abroad in this prospectus.

 

Pro forma

As Adjusted

 

The cardinal of shares to be outstanding anon afore and immediately after this alms is based on 2,632,710 shares of our accustomed b and 1,951,261 shares of Alternation C Adopted B outstanding as of June 30, 2017, and excludes as of that date:

 

331,293 shares of accustomed b issuable aloft the exercise of warrants with an exercise accumulated of $1.39 per share;

 

563,910 shares of accustomed b issuable aloft the exercise of warrants with an exercise accumulated of $2.66 per allotment which were acclimatized into Alternation C Adopted B on October 4, 2017;

 

 

 

420,000 shares of accustomed b issuable aloft the exercise of warrants with an exercise accumulated of $6.00 per share;

 

 

 

 

 

DILUTION

 

Our net absolute book accumulated of our common stock as of June 30, 2017, was about $(3,051,000), or about $(0.67) per allotment of accustomed b and Adopted Stock (see agenda 1 below). “Net absolute book value” is absolute assets bare the sum of liabilities and abstract assets. “Net absolute book accumulated per share” is net absolute book accumulated disconnected by the absolute cardinal of shares outstanding.

 

After giving aftereffect to (i) the issuance of 185,929 shares of accustomed b and warrants to acquirement an accumulated of 139,447 shares of accustomed b (assuming no Preferred Stock in lieu of accustomed b is issued) aloft the closing of this alms as a aftereffect of the about-face of the 2017 Addendum as of June 30, 2017 (assuming no Adopted B is issued aloft about-face of the 2017 Notes), and (ii) the auction of  shares of accustomed b (assuming no Adopted B is issued aloft about-face of the 2017 Notes) at an afflicted alms accumulated of $7.00 per allotment and accompanying accreditation (the aftermost appear sales accumulated of our accustomed b on the OTCBQ on October 13, 2017) and after deducting the underwriting abatement and estimated alms costs payable by us, our net absolute book accumulated as of June 30, 2017, would accepting been about $2,712,990, or about $0.48 per allotment of accustomed and adopted (see agenda 1 below) stocks based on shares of accustomed and adopted stocks outstanding on an as adapted abject at that time of the offering. This represents an absolute accepting in net absolute book accumulated of $1.15 per allotment to our absolute stockholders and an absolute concoction of approximately $6.52 per allotment to new investors accommodating in this offering, as illustrated by the afterward table:

 

 

The altercation of dilution, and the table quantifying it, assumes no exercise of any outstanding options or warrants or added potentially dilutive securities. The exercise of potentially dilutive antithesis accepting an exercise accumulated beneath than the alms accumulated would accepting the dilutive aftereffect to new investors.

 

In particular, the table aloft excludes the following potentially dilutive antithesis as of June 30, 2017:

 

 

 

 

 

To the admeasurement that any of these options are exercised, new options are issued beneath our disinterestedness allurement diplomacy and afterwards acclimatized or we affair added shares of common b in the future, there will be added concoction to new investors accommodating in this offering.

 

The admonition aloft assumes that the advocate does not exercise their over-allotment option. If the advocate contest its over-allotment advantage in full, the as adapted net absolute book accumulated will accepting to $0.62 per share, apery an absolute concoction of $6.38 per allotment to new investors.

 

(1) Adopted b participates appropriately with shares of common stock in our profits, losses and defalcation values.

 

 

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

 

You should apprehend the following discussion and assay of cyberbanking activity and after-effects of operations in affiliation with our cyberbanking statements and the related addendum thereto included abroad in this prospectus. In accession to absolute information, the afterward altercation and ysis includes avant-garde admonition that involves risks, uncertainties and assumptions. Our absolute after-effects and the timing of contest could adapt materially from those advancing by these avant-garde statements as a aftereffect of abounding factors, including those discussed beneath “Risk Factors” and abroad in this prospectus. See “Cautionary Agenda Apropos Forward-Looking Statements” included abroad in this prospectus.

 

Overview

 

We are a medical accent aggregation assimilation on noninvasive biological response-activating accessories that ambition anguish healing and affliction assay and can be administered at home, without the abetment of medical professionals. Our WoundShield, PainShield and UroShield accessories are backed by atypical technology which relates to ultrasound allegation through apparent acoustic waves.

 

Recent Events

 

Since March 1, 2017, we accepting completed a alternation of arch financings pursuant to which we accepting accustomed accumulated accretion of $1,380,000 in barter for convertible promissory addendum in the accumulated arch accumulated of $1,380,000, and seven-year warrants to acquirement an accumulated of 552,000 shares of accustomed b at an exercise accumulated of $5.90 per share.

 

The arch accumulated and all accrued but unpaid interest on ceremony 2017 Agenda will become due and payable on the beforehand of the (i) 5-year ceremony of the date of issuance, or (ii) the date we complete a Able Financing, which is an disinterestedness costs pursuant to which we affair and advertise shares of capital b constant in accumulated accretion of at atomic $2,000,000. The 2017 Addendum buck assimilation at a accumulated of 6% per annum.

 

Notwithstanding annihilation in the 2017 Notes to the contrary, all of the holders of the 2017 Addendum accepting agreed to catechumen the outstanding arch and accrued but unpaid interest on their 2017 Addendum into shares of our basal b and accepting into 180 day lock-up agreements with ceremony to such securities issued aloft about-face of the 2017 Addendum in the accident we able a Able Costs above-mentioned to December 31, 2017, pursuant to a aing allegation underwritten alms that after-effects in our accustomed b actuality contemporaneously listed on the NYSE American, the Nasdaq Basal Market, the Nasdaq All-around Bazaar or the Nasdaq All-around Baddest Market, aloft the closing date of such Qualified Offering.

 

We apprehend this alms to accumulated such a Able Financing, and therefore, aloft closing of this offering, based on the outstanding arch accumulated and all accrued but contributed assimilation on the 2017 Addendum as of October 27, 2017, at 80% of the afflicted alms accumulated of $7.00 per allotment of common stock and accompanying warrant, which is the aftermost appear sales accumulated of our accustomed b as of October 27, 2017, we will be required to affair an accumulated of 252,613 shares of accustomed b and warrants to acquirement an accumulated of 189,460 shares of common stock (or Adopted B and warrants, if applicable) to the holders of the 2017 Notes, all of which will be accountable to lock-up agreements for 180 days. Dawson James Securities, Inc. may, in its sole discretion, aloft above-mentioned accounting consent, absolution all or any allocation of the shares accountable to the lock-up agreements.

 

In the absence of a Able Financing, on the adeptness date, the holders of our 2017 Addendum may accepting to accepting the outstanding arch and accrued but contributed assimilation thereon repaid in banknote or adapted into accustomed stock. To the admeasurement that the about-face of our 2017 Addendum causes any holder thereof to beneficially own added than 9.99% of our accustomed stock, such holder may accepting to accepting shares of our Alternation C Convertible Preferred Stock (the “Series C Adopted Stock”) in lieu of accustomed b or accustomed b equivalents. If there is a change of control and the 2017 Addendum accepting not been ahead adapted otherwise, the investors may, at their option, (a) accepting an amount in banknote according to the sum of the aboriginal arch accumulated of the 2017 Addendum and assimilation again accrued and contributed thereon, or (b) convert the 2017 Addendum and all accrued and contributed assimilation afterwards into shares of accustomed b or Alternation C Adopted B immediately prior to the closing of such change of ascendancy transaction at a accumulated per allotment according to the bottom of: (x) 80% of the amount equal to the caliber acquired by abacus (i) our estimated accumulated adumbrated by the barter acclimation set alternating in the agreement governing such change of ascendancy transaction, as bent in able accepting by our lath of directors, by (ii) the aggregate number of outstanding shares of accustomed stock, as afflicted on a absolutely adulterated basis, and (y) $5.90 per share, as such amount may be adapted for any b split, b dividend, reclassification or agnate contest affecting our basal stock.

 

 

Critical Accounting Policies

 

Use of estimates

 

The alertness of the circumscribed financial statements in acquiescence with U.S. GAAP requires administering to accomplish estimates, judgments and assumptions. We accepting that the estimates, judgments and assumptions acclimated are reasonable based aloft admonition accessible at the time they are made. These estimates, judgments and assumptions can affect the appear amounts of assets and liabilities and acknowledgment of accidental assets and liabilities at the dates of the cyberbanking statements, and the appear amounts of acquirement and costs during the advertisement period. Actual results could adapt from those estimates.

  

Functional currency

 

The accompanying cyberbanking statements have been able in U.S. dollars.

 

The majority of our expenses, costs activities and revenues are denominated and bent in U.S. dollars. We accepting that the U.S. dollar is the bill of the primary economic environment in which we accomplish and expects to abide to accomplish in the accountable future. Thus, our anatomic and reporting currency is the U.S. dollar.

 

Our diplomacy and balances denominated in U.S. dollars are presented at their aboriginal amounts. Non-dollar diplomacy and balances accepting been re-measured to U.S. dollars in accordance with the Accounting Standards Lath (ASC) 830, “Foreign Bill Matters”. All transaction assets and losses from re-measurement of budgetary antithesis breadth items denominated in non-dollar currencies are reflected in the statements of absolute accident as cyberbanking assets or expenses, as appropriate.

 

Revenue recognition

 

We accomplish revenues from the auction of our products to distributors and patients. Revenues from those accessories are accustomed in accordance with ASC 605, “Revenue Recognition,” when allegation has occurred, actuating affirmation of an acceding exists, the fee is anchored or determinable, no added obligation exists and collectability is probable.

 

Stock-based compensation

 

We ceremony for stock-based advantage in accordance with ASC 718, “Compensation – B Compensation”, (“ASC 718″), which requires companies to estimate the fair accumulated of equity-based acquittal awards on the date of accepting appliance an option-pricing model. The accumulated of the allocation of the accolade that is ultimately accustomed to belong is accustomed as an accumulated over the requisite ceremony periods on a beeline line method in our circumscribed ceremony of absolute loss.

 

We accepting aboriginal adopted Accounting Accustomed Update (“ASU”) 2016-09, “Compensation – B Compensation”, in the accustomed circumscribed cyberbanking statements and ceremony for forfeitures as they occur.

 

We declared the Black-Scholes-Merton option pricing archetypal as the best adapted fair accumulated acclimation for our stock-options awards. The option-pricing archetypal requires a number of assumptions, of which the best cogent are the accustomed b accumulated animation and the accustomed advantage term. Accustomed volatility was afflicted based aloft agnate traded companies’ absolute allotment accumulated movements. The accustomed advantage appellation represents the aeon that our b options are accustomed to be outstanding. We currently uses the simplified method, in accordance with ASC No.718-10-S99-1 (SAB No. 110), and will abide to do so until able absolute exercise abstracts supports appliance expected life assumptions. The assertive assimilation accumulated is based on the crop from U.S. Treasury zero-coupon bonds with an agnate term. The accustomed allotment crop accepting is based on our absolute acquaintance and apprehension of no approaching allotment payouts. We have historically not paid banknote assets and has no accountable diplomacy to pay banknote assets in the future.

 

 

We administrate ASC 505-50, “Equity-Based Payments to Non-Employees” (“ASC 505″) with ceremony to options and warrants issued to non-employees which requires the use of advantage appraisal models to admeasurement the fair accumulated of the options and warrants at the altitude date.

  

Income taxes

 

We ceremony for assets taxes in accordance with ASC 740, “Income Taxes”. This affair prescribes the use of the accountability acclimation whereby deferred tax assets and liability account balances are bent based on differences amid cyberbanking advertisement and tax bases of assets and liabilities and are measured appliance the allowable tax ante and laws that will be in aftereffect aback the differences are accustomed to reverse. We provide full appraisal allowance, to abate deferred tax assets to the accumulated that is added able than not to be realized.

 

We accouterments a two-step accepting to recognize and admeasurement ambiguous tax positions. The aboriginal footfall is to appraise the tax position taken or accustomed to be taken in a tax return by chargeless if the weight of accessible affirmation indicates that it is added able than not that, on an appraisal of the technical merits, the tax position will be abiding on audit, including resolution of any accompanying appeals or activity processes. The second footfall is to admeasurement the tax ceremony as the bigger accumulated that is added than 50% (cumulative basis) able to be realized upon ultimate settlement.

 

Convertible promissory notes

 

We ceremony for our outstanding convertible promissory addendum in accordance with ASC 470-20, “Debt with About-face and Added Options” (“ASC 470-20″) and ASC 815 “Derivatives and Hedging” (“ASC 815″).

 

In accordance with ASC 470-20 we aboriginal allocate the accretion to freestanding accountability accoutrement (warrants) that are abstinent at fair accumulated at ceremony advertisement date, based on their fair accumulated (unless the warrants do not lath a down-round aegis mechanism, and are again abstinent at fair accumulated at inception abandoned and classified as disinterestedness instruments). The absolute accretion are allocated amid all added freestanding instruments (embedded benign about-face feature, if applicable, and convertible debt) based on the about fair belief of the instruments at the time of issuance.

 

In addition, beneath the guidelines of ASC 470-20, we admeasurement an anchored benign about-face affection on the date of arising of instruments which buck such feature, by allocating a allocation of the accretion according to the built-in accumulated of the affection to added paid in capital. The built-in accumulated of the feature is afflicted on the date of arising appliance the able about-face accumulated which after-effects from the allocation of the proceeds between the convertible debt and the anchored component. The built-in accumulated is apprenticed to the allocation of the accretion allocated to the convertible debt. We admit an anchored benign about-face affection accompanying to our convertible promissory notes. The beneficial about-face affection is amortized to our circumscribed statements of absolute accident over the appellation of the liability.

 

Warrant liability

 

The fair accumulated of the accountability for our warrants issued to investors in 2013 and 2014 was afflicted appliance the Black-Scholes model. We accounted for these warrants according to the accoutrement of ASC 815 and, due to their anti-dilution protections, we classified them as liabilities, abstinent at fair value for ceremony advertisement aeon until they are acclimatized or expire, with changes in fair accumulated accustomed in our circumscribed statement of absolute accident as cyberbanking assets or expense.

 

 

Recently Issued Accounting Standards

 

In May 2014, the Cyberbanking Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Acquirement from Diplomacy with Barter (Topic 606). On July 9, 2015 the FASB voted to accepting a one-year adjournment of the able date and to admittance companies to voluntarily accept the new accustomed as of the original able date. The new accustomed is able for advertisement periods alpha afterwards December 15, 2018. The accustomed will supersede absolute acquirement accepting guidance, including industry-specific guidance, and will lath companies with a single revenue accepting archetypal for acquainted acquirement from diplomacy with customers.

 

The accustomed requires acquirement to be recognized when promised appurtenances or casework are transferred to barter in amounts that reflect the appliance to which the aggregation expects to be advantaged in barter for those appurtenances or services. Accepting of the new rules could affect the timing of acquirement recognition for assertive transactions. The two able alteration methods beneath the new accustomed are the abounding attendant method, in which case the accustomed would be activated to ceremony above-mentioned advertisement aeon presented, or the adapted attendant method, in which case the accumulative aftereffect of applying the accustomed would be accustomed at the date of antecedent application.

  

In April 2016, the FASB issued ASU 2016-10, “Revenue from Diplomacy with Barter (Topic 606): Anecdotic Accomplishment Obligations and Licensing” (“ASU 2016-10″), which clarifies the afterward two aspects of Affair 606: (a) anecdotic accomplishment obligations; and (b) the licensing implementation guidance. The amendments do not change the accumulated assumption of the admonition in Affair 606. The alteration will be effective with ASU 2014-09.

 

In May 2016, the FASB issued ASU 2016-12, “Revenue from Diplomacy with Barter (Topic 606): Narrow-Scope Improvements and Activated Expedients” (“ASU 2016-12″), which amends the admonition in the new acquirement accustomed on collectability, noncash consideration, presentation of sales tax, and transition. The amendments are brash to abode accomplishing issues and lath added activated expedients to abate the accumulated and complexity of applying the new acquirement standard. The new accustomed will be able with ASU 2014-09.

 

In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Affair 606, Acquirement from Diplomacy with Customers, which clarifies specific aspects of ASU 2014-09, including accepting entities not to accomplish quantitative disclosures about absolute accomplishment obligations in certain cases and astute entities that use any of the new or ahead absolute accession exemptions to aggrandize their qualitative disclosures. The new accustomed additionally makes twelve added abstruse corrections and improvements to ASU 2014-09. The new accustomed will be effective with ASU 2014-09.

 

We are still in the activity of commutual our assessment on the appulse this admonition will accepting on our circumscribed cyberbanking statements and accompanying disclosures.

 

In February 2016, the FASB ASU 2016-02-Leases (ASC 842), which sets out the attempt for the recognition, measurement, presentation and acknowledgment of leases for both parties to a acclimation (i.e. lessees and lessors). The new accustomed requires lessees to administrate a bifold approach, classifying leases as either finance or operating leases based on the assumption of whether or not the allotment is finer a financed acquirement by the lessee. This allocation will actuate whether allotment accumulated is accustomed based on an able assimilation acclimation or on a straight line abject over the appellation of the lease, respectively. A aborigine is additionally adapted to almanac a right-of-use asset and a allotment liability for all leases with a appellation of greater than twelve months behindhand of their classification. Leases with a appellation of twelve months or beneath will be accounted for agnate to absolute admonition for operating leases. The new accustomed requires lessors to account for leases appliance an accepting that is essentially agnate to absolute admonition for sales-type leases, absolute costs leases and operating leases. ASC 842 supersedes the antecedent leases standard, ASC 840. The accustomed is able on January 1, 2020, with aboriginal accepting permitted. We are currently evaluating the appulse of the accepting of this accustomed on our circumscribed financial statements.

 

In March 2016, the Cyberbanking Accounting Standards Board (“FASB”) issued Accounting Standards Adapt (“ASU”) 2016-09, “Compensation – B Compensation (Topic 718): Improvements to Abettor Share-Based Acquittal Accounting”. The adapt simplifies assertive aspects of the accounting for share-based acquittal transactions, including assets taxes, allocation of awards and allocation in the ceremony of cash flows and accident accumulated calculation. The amendments of this ASU are able for advertisement periods alpha afterwards December 15, 2016 for accessible entities. For all added entities, the amendments are able for ceremony periods alpha afterwards December 15, 2017, and acting periods aural ceremony periods alpha afterwards December 15, 2018. Aboriginal accepting is able about all of the admonition allegation be adopted in the aloft period. We accepting aboriginal adopted Accounting Accustomed Adapt (“ASU”) 2016-09, “Compensation – B Compensation”, in the accustomed circumscribed cyberbanking statements and ceremony for forfeitures as they occur.

 

 

In May 2017 the FASB issued ASU No. 2017-09,  Compensation – B Advantage (Topic 718): Ambit of Modification Accounting . ASU 2017-09 provides admonition about which changes to the terms or altitude of a share-based acquittal accolade crave an article to administrate modification accounting in Affair 718. ASU No. 2017-09 is able for cyberbanking statements issued for ceremony advertisement periods alpha afterwards December 15, 2017 and acting periods within those years. Beforehand appliance is permitted. The accepting of the new requirements of ASU No. 2017-09 are not expected to accepting a absolute appulse on the Company’s circumscribed cyberbanking position or after-effects of operations.

 

In July 2017, the FASB issued ASU 2017-11,  Earnings Per Allotment (Topic 260), Distinguishing Liabilities from Disinterestedness (Topic 480), Derivatives and Ambiguity (Topic 815): I. Accounting for Assertive Cyberbanking Instruments with Bottomward Annular Appearance and II. Advancement of the Broad Cessation for Mandatorily Redeemable Financial Instruments of Assertive Non-public Entities and Assertive Mandatorily Redeemable Non-controlling Interests with a Scope Exception .  Part I applies to entities that affair cyberbanking instruments such as warrants, convertible debt or convertible preferred b that lath bottomward annular features. Allotment II artlessly replaces the broad cessation for assertive mandatorily redeemable non-controlling interests and mandatorily redeemable cyberbanking instruments of nonpublic entities absolute aural Accounting Standards Codification (ASC) Affair 480 with a ambit barring and does not appulse the accounting for these mandatorily redeemable instruments. This ASU is able for accessible companies for the ceremony advertisement periods alpha afterwards December 15, 2018, and acting periods within those ceremony periods. Aboriginal accepting is permitted. The Aggregation is currently evaluating the appulse that the accepting of the accustomed may accepting on its circumscribed cyberbanking statements.

 

Extended Alteration Aeon for “Emerging Beforehand Companies”

 

We accepting adopted to use the affiliated transition period for acknowledging with new or revised accounting standards beneath Breadth 102(b)(1) of the Jumpstart Our Business Act of 2012 (known as the JOBS Act). This acclamation allows us to adjournment the accepting of new or revised accounting standards that accepting different effective dates for accessible and clandestine companies until those standards administrate to clandestine companies. As a aftereffect of this election, our circumscribed cyberbanking statements may not be commensurable to companies that accede with accessible aggregation able dates. Because our circumscribed cyberbanking statements may not be commensurable to companies that accede with accessible aggregation able dates, investors may accepting adversity evaluating or comparing our business, accomplishment or diplomacy in allegory to added accessible companies, which may accepting a abrogating appulse on the accumulated and clamminess of our accustomed stock.

 

Going Concern

 

The cyberbanking statements accepting been prepared assuming that we will abide as a activity concern.  Since our formation, we activated funds generated from clandestine placement offerings and debt to armamentarium our artefact development. We incurred losses in the accumulated of $2,831,000 during the year assured December 31, 2016. As of June 30, 2017, we had an accumulated arrears of $25,142,000 and a absolute stockholders’ arrears of $3,051,000. The alternating losses from operations and accustomed clamminess accession abundant agnosticism about our adeptness to abide as a activity concern.  Our continuation is abased on accepting added financing.

 

  Results of Operations

 

Six Months Ended June 30, 2017 Compared to Six Months Assured June 30, 2016

 

Revenues . For the six months assured June 30, 2017 and 2016, our revenues were about $104,000 and $119,000, respectively, a abatement of approximately 12.6%, or $15,000, amid the periods. The abatement was mainly attributable to decreased sales to consumers in the six months ended June 30, 2017. Our revenues may adapt as we add new consumers or aback absolute distributors or consumers accomplish large purchases of our accessories during one aeon and no purchases during accession period. Our revenues may adapt from quarter-to-quarter and any beforehand or abatement in revenues by assay may not be beeline or consistent.

 

 

For the six months ended June 30, 2017, the allotment of revenues attributable to our accessories was: PainShield – 93% and UroShield – 7%. For the six months ended June 30, 2016, the allotment of revenues attributable to our accessories was: PainShield – 93% and UroShield – 7%. For the six months assured June 30, 2017 and 2016, the allotment of revenues attributable to our disposable accessories was 42% and 48%, respectively. For the six months assured June 30, 2017 and 2016, the allocation of our revenues that was acquired from distributors was 36% and 33%, respectively.

 

Gross Profit . For the six months assured June 30, 2017 and 2016, gross accumulation remained banausic at about $70,000. Gross accumulation for the six months assured June 30, 2017 remained banausic from the aloft aeon in 2016 admitting lower revenues due to a markdown of obsolete inventory during such aeon in 2016.

 

Gross accumulation as a percentage of revenues was about 67% and 59% for the six months assured June 30, 2017 and 2016, respectively. The accepting in gross profit as a allotment is mainly due to the markdown of anachronistic ceremony as declared above.

 

Research and Development Expenses . For the six months assured June 30, 2017 and 2016, assay and development costs were about $314,000 and $287,000, respectively, an accepting of about 9%, or $27,000, amid the periods. The accepting was primarily due to the increase in costs accompanying to our ytic trials.

 

Research and development expenses as a allotment of absolute revenues were about 302% and 241% for the six months assured June 30, 2017 and 2016, respectively. The accepting was due primarily to the accepting in costs declared above.

 

Our assay and development expenses abide mainly of accumulated costs to advisers circuitous in assay and development activities, stock-based compensation expenses, costs accompanying to subcontracting, patents appliance and registration, ytic balloon and accessories costs associated with and allocated to assay and development activities.

 

Selling and Marketing Expenses . For the six months assured June 30, 2017 and 2016, diplomacy and business costs were about $200,000 and $271,000, respectively, a abatement of about 26%, or $71,000, amid the periods. The abatement was mainly due to a decrease in our sales agents and to a bottom accumulated decreased diplomacy and business activities, decidedly barter appearance costs and marketing campaigns as we had to abate our sales ceremony due to apprenticed banknote resources.

 

Selling and business expenses as a allotment of absolute revenues were about 192% and 228% for the six months assured June 30, 2017 and 2016, respectively. The abatement was due primarily to the abatement in costs declared above.

 

Selling and business expenses consist mainly of accumulated costs to absolute sales and business employees, stock-based advantage expenses, biking expenses, advertising and business expenses, appoint and accessories costs associated with and allocated to diplomacy and business activities.

 

General and Administrative Expenses . For the six months assured June 30, 2017 and 2016, accustomed and authoritative costs were about $1,017,000 and $442,000, respectively, an accepting of about 130%, or $575,000, amid the periods. The accepting was mainly due to a $415,000 accepting in our b based advantage and to a bottom accumulated the added advantage costs of the new management team assassin in the fourth assay of 2016.

 

General and administrative expenses as a allotment of absolute revenues were about 978% and 371% for the six months assured June 30, 2017 and 2016, respectively. The accepting was due primarily to the accepting in costs declared above.

 

 

Our accustomed and administrative expenses abide mainly of accumulated costs for administering and authoritative employees, share-based advantage expenses, accounting, legal and accessories costs associated with accustomed and authoritative activities and costs associated with actuality a publicly traded company.

 

Financial Expenses, net . For the six months assured June 30, 2017 and 2016, cyberbanking expenses, net were about $242,000 and $156,000, respectively, an accepting of about 55%, or $86,000, amid the periods. The accepting resulted primarily an added accumulated of approximately $320,000 accompanying to the arising of the Warrants amortized over the accustomed activity of the 2017 Addendum issued in the aboriginal two quarters of 2017 ceremony by a $131,000 abridgement due to a lower appraisal acclimation of our warrants that were issued with our 2013 and 2015 convertible promissory notes.

 

Tax expenses.  For the six months assured June 30, 2017 and 2016, tax costs were $22,000 and $19,000, respectively. The tax accumulated is computed by abacus assets afore taxes at our Israeli accent by the adapted tax rate. The accepting in our tax costs was due to added spending by our Israel subsidiary.

 

Loss.  Our loss increased by about $620,000, or 56%, to about $1,725,000 for the six months assured June 30, 2017 from approximately $1,105,000 in the aloft aeon of 2016. The accepting in net accident resulted primarily from the factors declared above.

 

Three Months Ended June 30, 2017 Compared to Three Months Assured June 30, 2016

 

Revenues . For the three months assured June 30, 2017 and 2016, our revenues were about $52,000 and $62,000, respectively, a abatement of approximately 16%, or $10,000, amid the periods. The abatement was mainly attributable to decreased sales to our consumers in the three months ended June 30, 2017. Our revenues may adapt as we add new consumers or distributors or aback absolute consumers or distributors make ample purchases of our accessories during one aeon and no purchases during accession period. Our revenues may adapt from quarter-to-quarter and any beforehand or abatement in revenues by assay may not be beeline or consistent.

 

For the three months ended June 30, 2017, the allotment of revenues attributable to our accessories was: PainShield – 92% and UroShield – 8%. For the three months assured June 30, 2016, the allotment of revenues attributable to our accessories was: PainShield – 90% and UroShield -10%. For the three months assured June 30, 2017 and 2016, the allotment of revenues attributable to our disposable accessories was 46% and 41%, respectively. For the three months assured June 30, 2017 and 2016, the allocation of our revenues that was acquired from distributors was 37% and 27%, respectively.

 

Gross Profit . For the three months assured June 30, 2017, gross accumulation decreased by about 15%, or $6,000, to about $34,000 from approximately $40,000 during the aloft aeon in 2016. The abatement was due lower sales as able-bodied as a about-face in college sales of accessories awash through distributors that about backpack lower gross margins.

 

Gross accumulation as a percentage of revenues was about 67% and 65% for the three months assured June 30, 2017 and 2016, respectively. The accepting in gross profit as a allotment is mainly due to the added allotment of college allowance sales declared above.

 

Research and Development Expenses . For the three months assured June 30, 2017 and 2016, assay and development costs were about $164,000 and $173,000, respectively, a abatement of about 5%, or $9,000, amid the periods. The abatement was primarily due to a baby abatement in costs accompanying to our ytic trials.

 

Research and development expenses as a allotment of absolute revenues were about 315% and 279% for the three months assured June 30, 2017 and 2016, respectively. The accepting was due to the abatement in revenues.

 

Our assay and development expenses abide mainly of accumulated costs to advisers circuitous in assay and development activities, stock-based compensation expenses, costs accompanying to subcontracting, patents appliance and registration, ytic balloon and accessories costs associated with and allocated to assay and development activities.

 

 

Selling and Marketing Expenses . For the three months assured June 30, 2017 and 2016, diplomacy and business costs were about $106,000 and $126,000, respectively, a abatement of about 16%, or $20,000, amid the periods. The abatement was mainly due to a decrease in our sales agents and to a bottom accumulated decreased diplomacy and business activities, decidedly business costs as we had to abate our sales ceremony due to apprenticed banknote resources.

 

Selling and business expenses as a allotment of absolute revenues remained almost banausic and were about 204% and 203% for the three months ended June 30, 2017 and 2016, respectively.

 

Selling and business expenses consist mainly of accumulated costs to absolute sales and business employees, stock-based advantage expenses, biking expenses, advertising and business expenses, appoint and accessories costs associated with and allocated to diplomacy and business activities.

 

General and Administrative Expenses . For the three months assured June 30, 2017 and 2016, accustomed and authoritative costs were about $424,000 and $197,000, respectively, an accepting of about 115%, or $227,000, amid the periods. The accepting was mainly due to the added advantage costs of the new administering aggregation assassin in the fourth assay of 2016 including their b based compensation.

 

Our accustomed and administrative expenses abide mainly of accumulated costs for administering and authoritative employees, share-based advantage expenses, accounting, legal and accessories costs associated with accustomed and authoritative activities and costs associated with actuality a publicly traded company.

 

Financial Expenses, net . For the three months assured June 30, 2017 and 2016, cyberbanking expenses, net were about $178,000 and $144,000, respectively, an accepting of about 24%, or $34,000, amid the periods. The accepting resulted from added costs incurred from the arising of the Warrants amortized over the accustomed activity of the 2017 Addendum issued in the aboriginal two abode of 2017 offset by a abridgement acquired by a lower appraisal acclimation of our warrants that were issued with our 2013 and 2015 convertible promissory notes.

 

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Tax expenses.  For the three months assured June 30, 2017 and 2016, tax costs remained banausic at $11,000 and $10,000, respectively. The tax expense is computed by abacus assets afore taxes at our Israeli accent by the adapted tax rate. The accepting in our tax expenses was due to added spending by our Israel subsidiary.

 

Loss.  Our net loss added by about $239,000, or 39%, to about $849,000 for the three months assured June 30, 2017 from approximately $610,000 in the aloft aeon of 2016. The accepting in net accident resulted primarily from the factors declared above.

 

Twelve Months Assured December 31, 2016 Compared to Twelve Months Assured December 31, 2015

 

Revenues . For the twelve months ended December 31, 2016 and 2015, our revenues were about $229,000 and $147,000, respectively, an accepting of approximately 55.8%, or $82,000, amid the periods. The accepting was mainly attributable to added sales from abacus distributors as well as accepting absolute after-effects from our added business campaigns. Our revenues may adapt as we add new barter or when existing distributors accomplish ample purchases of our accessories during one aeon and no purchases during accession period. Our revenues may adapt from aeon to aeon and, as we abide to abound our business, beforehand in revenues by assay may not be linear or consistent. We do not ahead that our revenues will be impacted by aggrandizement or alteration prices in the accountable future.

 

For the twelve months assured December 31, 2016, the allotment of revenues attributable to our accessories was: PainShield – 90.8% and UroShield – 9.2%. For the twelve months assured December 31, 2015, the allotment of revenues attributable to our accessories was: PainShield – 96% and UroShield – 4%. For the twelve months assured December 31, 2016 and 2015, the allotment of revenues attributable to our disposable products was 42.5% and 59.9%, respectively. For the twelve months assured December 31, 2016 and 2015, the allocation of our revenues that was acquired from distributors was 30.3% and 23.2%, respectively.

 

 

Gross Profit . For the twelve months ended December 31, 2016, gross accumulation added by about 43.9%, or $43,000, to about $141,000 from approximately $98,000 during the aloft aeon in 2015.

 

 Gross accumulation as a allotment of revenues were about 61.6% and 66.6% for the twelve months assured December 31, 2016 and 2015, respectively. The abatement in gross profit as a allotment is mainly due to the added allotment of benefactor sales which about backpack a lower gross profit percentage than our absolute to chump sales, and to a bottom degree, the decreased allotment of revenues attributable to our disposable accessories which about accepting college margins additionally contributed to the reduction.

 

Our gross accumulation may be afflicted year-over-year by the mix of revenues amid sales to distributers and sales anon to the end barter (where sales anon to the end customers about accepting a college margin). As a result, we are accountable to year-over-year aberration in our gross profits.

 

Research and Development Expenses . For the twelve months assured December 31, 2016 and 2015, assay and development costs were $584,000 and $399,000, respectively, an accepting of about 46.37%, or $185,000, amid the periods. This accepting was mainly due to an added accumulated of clinical balloon costs that took abode in 2016 as able-bodied as added development of new products.

 

Research and development costs as a percentage of absolute revenues were about 255.0% and 271.4% for the twelve months assured December 31, 2016 and 2015, respectively.

 

Our assay and development costs consist mainly of accumulated costs to advisers circuitous in assay and development activities, b based advantage expenses, expenses related to subcontracting, patents, ytic balloon and accessories costs associated with and allocated to assay and development activities.

 

Selling and Business Expenses . For the twelve months assured December 31, 2016 and 2015, diplomacy and business costs were about $514,000 and $377,000, respectively, an accepting of about 36.3%, or $137,000, amid the periods.

 

The accepting in diplomacy and business expenses was mainly due to an accepting in diplomacy and business activities, decidedly added barter appearance expenses, new business campaigns initiated in 2016 and added compensation.

 

Selling and business costs as a percentage of absolute revenues were about 224.5% and 256.5% for the twelve months assured December 31, 2016 and 2015, respectively. The decrease in our allotment was due to the accepting in revenues.

 

Selling and business costs abide mainly of accumulated costs to absolute sales and business employees, stock-based advantage expenses, biking expenses, announcement and marketing expenses, appoint and accessories costs associated with and allocated to diplomacy and business activities.

 

General and Authoritative Expenses . For the twelve months assured December 31, 2016 and 2015, accustomed and authoritative costs were about $1,359,000 and $746,000, respectively, an accepting of about 82.17%, or $613,000, amid the periods.

 

The accepting was mainly attributable to incurring professional fees and added costs associated with able a about traded company, an accepting in authoritative advantage as we added new administering and an accepting in stock-based advantage to our administering and directors.

 

General and authoritative costs as a percentage of absolute revenues were about 593.44% and 507.48% for the twelve months assured December 31, 2016 and 2015, respectively. The accepting was due to the accepting in accustomed and authoritative expenses, declared above.

 

 

Our accustomed and authoritative costs consist mainly of accumulated costs for administering and authoritative employees, costs associated with actuality a about traded company, stock-based advantage expenses, accounting and accessories costs associated with accustomed and authoritative activities.

 

Financial Expenses, net . For the twelve months assured December 31, 2016 and 2015, cyberbanking expenses, net were $398,000 and $1,432,000, respectively, a abatement of approximately 72.2%, or $1,034,000, amid the periods. The abatement resulted primarily from the lower appraisal acclimation of our warrants and acquittal of the ceremony basal of promissory notes.

  

Tax expenses.  For the twelve months ended December 31, 2016 and 2015, tax costs were $117,000 and $28,000 respectively. The tax accumulated is computed by multiplying income afore taxes at our Israeli accent by the adapted tax accumulated and anonymous tax allowances as a aftereffect of tax positions taken.

 

Net Loss . Our net accident decreased by approximately $53,000, or 1.8%, to about $2,831,000 for the twelve months assured December 31, 2016 from about $2,884,000 during the aloft aeon in 2015. The decreased in net accident resulted primarily from the factors declared above.

 

Liquidity and Basal Resources

 

We abide to accepting losses and abrogating cash flows from operating activities. We accepting incurred losses in the accumulated of $1,725,000 during the six ages aeon assured June 30, 2017, and accepting accumulated abrogating banknote breeze from operating activities of $919,000 for the six ages aeon assured June 30, 2017. For the twelve months assured December 31, 2016, we incurred losses in the accumulated of $2,831,000 during the year assured December 31, 2016, and accepting accumulated abrogating banknote breeze from operating activities of $1,533,000 for the year assured December 31, 2016. As of June 30, 2017, we had an accumulated arrears of $25,142,000 and a absolute stockholders’ arrears of $3,051,000. We expect to abide to accepting losses and abrogating banknote flows from operating activities and as a result, we do not accepting able resources to armamentarium our operation for the aing twelve months. These altitude accession abundant doubts about our adeptness to abide as a going concern. We will allegation to accession added basal to accounts our losses and abrogating banknote flows from operations for the next twelve months and may abide to be abased on added basal adopting as affiliated as our accessories do not adeptness commercial profitability.

 

During the year assured December 31, 2016, and through August 14, 2017, we met our concise clamminess requirements from our absolute banknote affluence and arch financings of $1,030,000. We intend to use the accretion of the alms to which this announcement relates to accommodated such short-terms requirements as able-bodied as to beforehand our abiding plans. It is our accustomed accepting that the accretion of this alms will lath sufficient funding to accommodated our clamminess needs for added than a year.

 

Our approaching basal requirements and the adequacy of our accessible funds will depend on abounding factors, including our adeptness to auspiciously commercialize our products, our development of approaching accessories and aggressive abstruse and bazaar developments. However, we may be clumsy to accession able additional capital aback we crave it or aloft acceding favorable to us. In addition, the acceding of any antithesis we affair in approaching financings may be added favorable to new investors and may lath preferences, aloft voting rights and the arising of warrants or other derivative securities, which may accepting a added dilutive aftereffect on the holders of any of our antithesis again outstanding. If we are clumsy to accepting able funds on reasonable terms, we will allegation to abbreviate operations significantly, including possibly postponing advancing ytic trials or entering into costs agreements with airedale terms.

 

We do not accepting any absolute commitments to capital expenditures as of June 30, 2017, and we are not acquainted of any absolute trends in basal assets that would appulse our business.

  

Six Months Assured June 30, 2017 Compared to Six Months Assured June 30, 2016

 

General . As of June 30, 2017, we had banknote and banknote equivalents of about $215,000, compared to about $106,000 as of December 31, 2016. The abatement is attributable primarily to our net banknote acclimated in operating activities. We accepting historically met our cash needs through a accumulated of arising of equity, borrowing activities and sales. Our banknote requirements are about for product development, assay and development cost, business and sales activities, accounts and authoritative cost, basal expenditures and accustomed alive capital.

 

 

Cash acclimated in our operating activities was about $919,000 for the six months assured June 30, 2017 and $840,000 for the aloft aeon in 2016. The increase in our banknote accepting was mainly associated with the accepting in our net operating accident for the six months assured June 30, 2017 compared to the three months assured June 30, 2016, for the affidavit declared above.

 

Cash acclimated in investing activities was $2,000 and $8,000 for the six ages periods assured June 30, 2017 and 2016, respectively, and was accompanying to purchases of anchored assets.

 

Cash provided by financing activities was about $1,030,000 for the six months assured June 30, 2017 acquired from accretion accustomed from the issuance of 2017 Addendum and $33,000 for the six months assured June 30, 2016, which was acquired from accretion from the exercise of certain options.

 

Twelve Months Assured December 31, 2016 Compared to Twelve Months Assured December 31, 2015

 

General . As of December 31, 2016, we had banknote and banknote equivalents of about $106,000, compared to about $1,614,000 as of December 31, 2015. We have historically met our banknote needs through a accumulated of arising of equity, borrowing activities and sales. Our banknote requirements are about for artefact development, assay and development cost, business and sales activities, accustomed and administrative cost, basal expenditures and accustomed alive capital.

 

Cash acclimated in our operating activities was approximately $1,533,000 for the twelve months assured December 31, 2016 and about $1,480,000 for the aloft aeon in 2015. The increase in our accepting of banknote in our operating activities in the accumulated of $53,000 is mainly attributable to the accepting in costs associated with actuality a about traded company, and the accepting in assay and development and sales and business costs declared above.

 

Cash acclimated in our beforehand activities was approximately $8,000 during the twelve months assured December 31, 2016 and $1,000 during the twelve months assured December 31, 2015.

 

Cash provided by costs activities was approximately $33,000 from accretion from the exercise of b options for the year assured December 31, 2016 compared to $3,005,000 for the twelve months assured December 31, 2015, which acquired from arising of shares of accustomed stock, Alternation C Adopted B and warrants to purchase shares of accustomed b for accumulated appliance of $3,005,000, which is net of arising costs of $145,000.

 

Off Antithesis Breadth Arrangements

 

As of June 30, 2017, we accepting no off-balance sheet transactions, arrangements, obligations (including accidental obligations), or added relationships with unconsolidated entities or added bodies that have, or may have, a absolute aftereffect on our cyberbanking condition, changes in cyberbanking condition, revenues or expenses, after-effects of operations, liquidity, basal expenditures or basal resources.

 

Factors That May Affect Approaching Operations

 

We accepting that our approaching operating results will abide to be accountable to ceremony variations based aloft a avant-garde array of factors, including the acclimation patterns of our distributors, timing of authoritative approvals, the accomplishing of assorted phases of our ytic trials and accomplishment efficiencies due to the acquirements ambit of utilizing new abstracts and equipment. Our operating after-effects could additionally be impacted by a weakening of the Euro and deepening of the New Israeli Shekel, or NIS, both adjoin the U.S. dollar. Lastly, added bread-and-er conditions we cannot apprehend may affect chump demand, such as abandoned country acceding behavior pertaining to our products.

  

 

BUSINESS 

Overview

 

We were organized as a Delaware corporation in October 2003. Through our wholly-owned subsidiary, NanoVibronix Ltd., a clandestine aggregation congenital beneath the laws of the State of Israel, we focus on noninvasive biological response-activating accessories that ambition biofilm prevention, anguish healing and affliction assay and can be administered at home, afterwards the abetment of medical professionals. In 2016, we were one of the companies declared by the Israeli government to present at its “Israeli Innovation and Technologies in Africa and Developing Countries” conference. Our primary products, which are in assorted stages of ytic and bazaar development, currently consist of:

 

 

PainShield™, a patch-based therapeutic ultrasound technology to amusement pain, beef accepting and collective contractures by accustomed a localized ultrasound aftereffect to treat affliction and abet bendable tissue healing in a targeted area; and

 

Each of our PainShield, UroShield, and WoundShield products employs a small, disposable transducer that transmits low frequency, low acuteness ultrasound acoustic after-effects that seek to acclimation and change tissue, musculoskeletal and vascular structures, and abatement biofilm accumulation on urinary catheters and associated urinary amplitude infections. Through their size, adequacy and affluence of use, these accessories are brash to eliminate the allegation for technicians and medical cadre to manually administrate ultrasound assay through ample transducers, thereby promoting accommodating adeptness and enabling added cost-effective home-based care.

 

PainShield is currently austere for marketing in the United States by the U.S. Food and Biologic Administering although there has not been a cogent sales and business effort to date. All three of our accessories accepting CE Mark approval in the European Union, a Canadian medical accent allotment and a certificate allowing us to advertise PainShield, UroShield and WoundShield in Israel. We are able to advertise PainShield, UroShield and WoundShield in India and Ecuador based on our CE Mark. We accepting consummated sales of PainShield and UroShield in the accordant markets, although to date sales accepting been minimal; WoundShield has not generated cogent acquirement to date. Alfresco of the United States we generally apply, through our distributor, for approval in a authentic country for a authentic artefact abandoned aback we accepting a distributor in abode with ceremony to such product.

 

In the United States, PainShield requires a prescription from a accountant healthcare practitioner. If U.S. Food and Biologic Administering approval is obtained, we anticipate that WoundShield and UroShield will crave a decree from a accountant healthcare practitioner in the United States. We anticipate that UroShield will be awash anon to bloom affliction accessories and appropriately will not crave a decree for these venues. However in added countries in which we advertise PainShield, UroShield, and WoundShield, such accessories are able for auction without a prescription.

 

In accession to the allegation to accepting regulatory approvals, we ahead that sales volumes and prices of our UroShield, PainShield, and WoundShield accessories will depend in large part on the availability of allowance advantage and acceding from third affair payers. Third affair payers lath governmental programs such as Medicare and Medicaid in the United States, clandestine allowance diplomacy and workers’ advantage plans. We do not currently accepting acceding codes for use of WoundShield in any of the markets in which we accepting authoritative ascendancy to sell WoundShield. Of the markets in which we accepting authoritative ascendancy to advertise PainShield, we accepting acceding codes in the United States (i.e., CPT codes) for ytic use only, but do not accepting such acceding codes for calm use of the product, although the artefact is marketed and awash for such use. With ceremony to UroShield, which may be acclimated in a ytic and home setting, we do not currently accepting acceding codes in any of the markets in which we accepting authoritative ascendancy to advertise UroShield. We anticipate that we will activate to seek acceding codes for use of our accessories in the markets in which we accepting authoritative authority to advertise such products; however, added ytic abstracts will be adapted in acclimation to accepting such acceding codes. Our current ongoing assay and planned assay may facilitate our adeptness to accepting acceding codes and there is no acceding that we will be acknowledged in accepting such codes quickly, or at all.

 

 

We accepting completed 5 abstracted ytic studies with UroShield that calm evaluated about 139 patients with urinary catheters. In patients beyond the UroShield product was acclimated there were no austere adverse contest reported, while a array of ytic benign observations were apparent including: catheter biofilm reduction, abridgement in catheter associated pain, abridgement in urinary amplitude infections, and a cogent decrease in bacteriuria rates. We are currently administering a bifold dark ytic balloon for UroShield in the United States in acclimation to obtain 510(k) approval from the U.S. Food and Biologic Administration. In July 2017, we affianced Idonea Solutions, Inc., an FDA consultant, to abetment in our efforts. If we are able to auspiciously accepting 510(k) clearance, we intend to accompany accepting reimbursement codes and to ambition accomplishment of partnerships with arch catheter artefact companies for sales and business efforts in the United States.

 

In addition, we are currently ramping up our clinical development and business efforts in North America with ceremony to PainShield. We are currently administering a clinical trial to appraise the aftereffect of PainShield in patients with trigeminal neuralgia. We accepting that a absolute aftereffect in this trial will abetment in our accretion the bartering use of this artefact through a absolute sales accomplishment that we intend to manage. We have also articular a bazaar for PainShield in the able sports industry, beyond in some cases acceding may be available from sports alumni organizations or, added likely, self-pay. In acclimation to accompany this market, we are announcement at sports trainers meetings, advancing alumni associations, announcement in their media, and negotiating with a sports trainer focused sales organization. The PainShield accent is offered for auction to practitioners with a provider rental diplomacy which was implemented in January 2017. The PainShield artefact was additionally adapted and added through assorted accessories for use aural the equine community. This market is currently actuality pursued through arresting equine clinicians and absolute sales assembly and distributors. We believe there is an adorable befalling in this articulation due to the abridgement of an apprehension for acceding and the befalling to sell at a exceptional accumulated point. We are advancing adapted distributors in the U.S. bazaar with assets and abilities to sell PainShield in the altered segments of the affliction assay market.

 

WoundShield has been evaluated in two published clinical studies done to-date that beforehand bigger localized claret breeze and oxygenation, and bigger contemporary oxygen saturation (Morykwas M, “Oxygen Assay with Apparent Acoustic Waveform Sonication,” European Anguish Administering Association 2011; Covington S, “Ultrasound-Mediated Oxygen Allegation to Lower Acme Wounds,” Wounds 2012; 24(8))). We supplied devices for these studies but had no added captivation with them. We are advancing licensing opportunities to beforehand bartering markets for the WoundShield product.

 

Business Model

 

All of our accessories abide of a reusable controller device and a disposable component, or transducer. The controllers accepting a activity accepting of up to three years, while the disposable transducer, has a activity accepting of up to a ages and allegation be replaced to lath the brash therapy. The accoutrement are purchased by either the benefactor or end user for use in any of the brash applications. Already the ambassador is purchased by the end user, alternating acquirement will be able by purchases of advancement transducers to the admeasurement that the end user continues treatment with our product.

 

In all artefact categories, our accessories are intended to be broadcast both by absolute distributors as able-bodied as by abeyant licensees. Benefactor accumulated is discounted to ceremony for their brash margins, based aloft acquirement volumes and/or alternating acquirement commitments, with the disposable transducer sold and broadcast in the aloft fashion. We currently accepting an accustomed benefactor acclimation and are implementing assertive criteria within such acclimation to ensure the adapted appointment of a benefactor or licensee. We additionally intend to add added distributors to our network.

 

 

Ultrasound Technology and Our Products

 

As acclaimed above, our primary accessories are based on the use of low abundance ultrasound, which delivers activity through automated accordance in the anatomy of complete waves. Ultrasound has affiliated been acclimated in concrete therapy, concrete medicine, rehabilitation and sports medicine. Moreover, there is a growing body of assay that supports the absolute biological furnishings of ultrasound. A 2002 abstraction indicates that low abundance ultrasound increases accepting about-face (Crisci AR, Ferreira AL, “Low-intensity pulsed ultrasound accelerates the about-face of the sciatic accepting afterwards neurotomy in rats”, Ultrasound Med. Biol. 2002 October; 28(10):1335-41). According to Atland, et. al., low abundance ultrasound additionally has important ameliorative metaic furnishings (Altland OD, Dalecki D, Suchkova VN, Francis CW, “Low-intensity ultrasound increases endothelial corpuscle nitric oxide synthase activity and nitric oxide synthesis”, J. Thromb. Haemost. 2004 April; 2(4):637-43). In addition, there is affirmation that ultrasound increases the healing of fractures (Warden SJ, Favaloro JM, Bennell KL, McMeeken JM, Ng KW, Zajac JD, Wark JD, “Low-intensity pulsed ultrasound stimulates the bone-forming response in UMR-106 cells”, Biochem. Biophys. Res. Commun. 2001 August 24; 286(3):443-50 and Warden SJ, Bennell KL, McMeeken JM, Wark JD, “Acceleration of alpha breach acclimation appliance the sonic accelerated breach healing acclimation (SAFHS)”, Calcif. Tissue Int. 2000 February; 66(2):157-63).

 

Research has added apparent that ultrasound therapy has resulted in added collagen acclimation (Da Cunha A, Parizotto NA, Vidal BC, “The aftereffect of ameliorative ultrasound on acclimation of the achilles bond (tendo calcaneus) of the rat”, Ultrasound Med. Biol. 2001 December; 27(12):1691-6), improved resolution of deepening (Young SR, Dyson M, “Macrophage admiration to ameliorative ultrasound”, Ultrasound Med. Biol. 1990; 16(8):809-16) and added tissue healing (Young SR, Dyson M, “Effect of ameliorative ultrasound on the healing of full-thickness excised bark lesions”, Ultrasonics. 1990 May; 28(3):175-80), which are all important factors in the wound healing process. Furthermore, assay has apparent that ultrasound assay can accord to added blur permeability (Sundaram J, Mellein BR, Mitragotri S, “An alpha and abstract assay of ultrasound-induced permeabilization of corpuscle membranes,” Biophys. J. 2003 May; 84(5):3087-101) and accelerated fibrinolysis, a activity that prevents claret clots from growing and becoming problematic (Harpaz D, “Ultrasound accent of thromytic therapy: observations and mechanisms”, Int. J. Cardiovasc Intervent. 2000 June; 3(2):81-89), which collectively beforehand the tissue about-face activity and healing of wounds. Sonophoresis, a activity that increases the assimilation of semisolid contemporary compounds, including medications, into the skin, is an additional significant aftereffect of ultrasound assay (Tezel A, Paliwal S, Shen Z, Mitragotri S, “Low-frequency ultrasound as a transcutaneous immunization adjuvant”, Vaccine 2005 May 31; 23(29):3800-7).

 

In general, ultrasound offers the benefits cited aloft by accretion bounded claret circulation, accretion vascular bank permeability, announcement protein secretion, promoting enzymatic reactions, accelerating nitric oxide production, announcement angiogenesis (the accumulation of new claret argosy from pre-existing vessels) and announcement fibroblast admeasurement (fibroblasts are a blazon of corpuscle that comedy a ytical role in anguish healing). We believe that the anatomy of evidence, and the absolute ameliorative aftereffect that ultrasound has for assorted indications, potentially provides for approaching artefact development opportunities for us.

  

Our proprietary technology consists of a small, thin (1 millimeter) transducer that is able of transmitting accelerated acoustic after-effects assimilate assay surfaces with a radius of up to 10 centimeters beyond the transducer. This technology allows us to amusement wounds by implanting our transducers into a small, carriageable self-adhering acoustic patch, thereby eliminating the allegation for technicians and medical cadre to manually administer ultrasound therapy, which should abate the accumulated of therapy. Moreover, we accepting that, based aloft the anatomy of evidence, the allegation of ultrasound through our carriageable accessories is according to or added able than absolute aggressive products, as our technology is bigger positioned to ambition the afflicted areas of the body.

 

While there are currently a cardinal of products on the bazaar that amusement affliction through ultrasound therapy, we accepting that our accessories differentiate themselves because they are portable, afterwards the affirmation to be acquainted into an aperture and they accomplish with a abundance of 100kHz (in adverse to other devices, which accepting a abundance of 1MHz), which agency our accessories do not aftermath calefaction that can accident tissue. Our accessories can therefore (i) be self-administered by the accommodating afterwards the allegation to be confused about the brash beyond by the accommodating or a clinician, (ii) be activated for a decidedly best aeon afterwards the accident of tissue accident and (iii) do not crave the use of gel. We are acquainted of one aggressive artefact with agnate ultrasound technology, the SAM® Sport4 by a aggregation declared Zetroz Systems LLC, aka ZetrOz, Inc. However, it is our accepting that this artefact does not accomplish apparent acoustic after-effects as our accessories do, the assay beyond is about apprenticed to that of the transducer’s diameter, the use of manual gel is still required and the transducer array is decidedly greater than ours (approximately 1.5cm). To our knowledge, the accent abandoned provides a array activity of 4 hours and is affiliated assay adjoin alternating therapy. We are additionally acquainted of a baby ytic study, for which after-effects were appear in August 2013, in which the SAM® Sport4 showed absolute after-effects in the assay of venous ulcers, a blazon of abiding wound.

 

 

Click to enlarge

 

Traditional ultrasound accent and our portable ultrasound patch-based accent and a allegory of their activity distribution, beyond the X-axis represents assay apparent and the Y-axis represents ultrasound activity assimilation abyss aural tissue.

 

In a allegory of a able ultrasound device and our carriageable ultrasound patch-based device, the accumulated beachcomber accustomed ultrasound machines with handheld transducers distribute the activity acutely into the body, as apparent aloft in diagram (A) on the left. In comparison, our accent distributes the energy on the surface, as apparent in diagram (B), thereby advisedly accretion the assay area. Our transducers may additionally be incorporated into assay patches, including patches that are brash to buck anesthetic and added compounds through the skin. The bearing and allegation of low abundance ultrasound over a aeon of time to a specific beyond has been termed “targeted slow-release ultrasound”. We accepting that this allegation acclimation of ultrasound may be commensurable to that of apathetic absolution medication in the biologic industry. This “targeted slow-release” adequacy is brash to acquiesce for added accustomed targeting of the brash assay beyond and appropriately may aftereffect in a added able ameliorative response.

  

Micro Accordance Technology and Our Products

 

It is able-bodied accustomed that accretion blood flow to the anguish and peri-wound beyond helps beforehand the healing of ischemic wounds. Micro-vibrations activated on the bark tissue increase bounded claret breeze and oxygen allegation to the anguish beyond and activate angiogenesis and beforehand factors that are helpful for the anguish healing process. Beating assay has been activate to activate claret breeze due to automated stresses of endothelial cells constant in added assembly of nitric oxide and vasodilation, as able-bodied as accepting bendable tissue and bark circulation (Maloney-Hinds et al., “The Role of Nitric Oxide in Bark Claret Breeze Increases due to beating in advantageous adults and adults with blazon 2 diabetes,” School of Medicine, Loma Linda University. Ca. Diabetes Technology & Therapeutics, 2009 p. 39-43). In addition, micro accordance abet bark apparent accepting axon reflex and blazon IIa beef fibers abbreviating rates, constant in vasodilation (Nakagami et al., “Effect of beating on bark claret breeze in an in vivo microcirculatory model”, The University of Tokyo, Bio-Science Trends 2007; 1 (3): 161-166). Ten ceremony of beating assay with laser doppler appear a consistent accepting in baptize agreeable of the aerial bark (TJ Ryan et al., “The aftereffect of automated armament (vibration or external compression) on the dermal baptize agreeable of the aerial bark and epidermis, adjourned by aerial abundance ultrasound”, Oxford Anguish Healing Institute, Journal of Tissue Viability, 2001. In accession study, beggarly claret breeze accepting was college in the vibration accumulation than the placebo group. Improvements in bounded claret breeze may be benign in the ameliorative advancement of pain or added affection constant from astute or abiding injuries (C. Button et al., “The aftereffect of multidirectional mechanical vibration on borderline apportionment of humans”, University of Otago New Zealand, Analytic Physiology and anatomic Imaging, 2007 27, p211-216). A abstraction on the aftereffect of able anatomy beating on lower acme bark claret breeze suggests, that abbreviate duration vibration abandoned decidedly increases lower acme bark claret flow, acceleration bark claret for a minimum of 10 ceremony following treatment (Lohman et al., “The aftereffect of able anatomy beating on lower acme bark claret breeze in accustomed subjects”, Department of Concrete Therapy, Loma Linda university, USA, Med Sci Monit, 2007; 13(2) 71-76). Beating has additionally been apparent to stimulate angiogenesis and beforehand factors such as vascular endothelial beforehand agency (Suhr F et al., “Effects of short-term vibration and hypoxia during aerial acuteness cycling exercise on circulating akin of angiogenic regulators in humans”, J Appl Physiol, 2007, 103:474-483,. Yue Z. et al., “On the cardiovascular furnishings of whole-body beating I. Longitudinal effects: hydrodynamic ysis”, Studies Appl Math, 2007, 119:95-109). Of acceptation with ceremony to diabetic wounds, in which a abiding anarchic appearance occurs, beating vasodilation has generated an aberrant anti-inflammatory action, mainly by suppression of nuclear factor-kβ, the key gene for anarchic mediators (Sackner, M.A., “Nitric Oxide is appear into circulation with whole-body, alternating acceleration”, Chest 2005;127;30-39).

 

 

Urinary catheter accepting is associated with pain and ache acquired by the chafe amid the catheter apparent and the urethral tissue. Generally, this chafe is treated by applying lubricating gels and low chafe catheter coatings. These methods are able for a abbreviate appellation during the catheter insertion as the lubricating gel is apprenticed captivated into the surrounding tissue and loses its aftereffect and the catheter coatings lose their atrocity aural a few days, as the blanket is covered by a attenuate blur of mucous.

 

Our artefact provides accordance alternating the surface of the urinary catheter that is in acquaintance with urethral tissue. We accepting that these accordance actualize a affiliated acoustic lubrication aftereffect alternating the apparent of the congenital catheter that is in acquaintance with the surrounding tissue, appropriately reducing catheter-tissue acquaintance time, which may abate agony from urethra chafe and adhesion. We accepting additionally apparent in animals and in humans that the micro-vibration technology can abate the akin of biofilm accumulation on urinary catheters.

 

Our Products

 

UroShield

 

UroShield is brash to ahead bacterial colonization and biofilm formation, accepting antibacterial adeptness in the catheter lumen and abatement affliction and ache associated with urinary catheter use. It is brash to be acclimated with any blazon of congenital urinary catheter behindhand of the absolute or coating. We accepting that if it is accustomed for marketing, UroShield could be the aboriginal medical accent on the bazaar that attempts to accompanying abode all of the aloft catheter-related issues. UroShield is agnate in architecture to WoundShield and PainShield, in that it uses a disciplinarian assemblage that produces low frequency, low acuteness ultrasound. The disciplinarian assemblage connects to a disposable transducer that is abrupt assimilate the alien allocation of the catheter to buck ultrasound assay to all catheter surfaces as able-bodied as the tissue surrounding the catheter.

 

Click to enlarge

 

Picture of UroShield with actuator

 

The UroShield acclimation has the afterward advantageous effects:

 

 

 

 

 

 

UroShield has undergone a cardinal of clinical trials. The Heidelberg 1 trial, which we sponsored, was a 22 accommodating randomized, bifold blind, sham-controlled, absolute trial that activated UroShield’s affirmation and adeptness to ahead biofilm in patients with an congenital Foley catheter. The balloon demonstrated that UroShield prevented biofilm in all patients with the alive accent as compared to biofilm actuality activate in seven of eleven of the ascendancy patients. In addition, there was a apparent abatement in pain, ache and accepting in the alive UroShield patients, as apparent by a statistically cogent abatement in the affirmation for the medications adapted to amusement urinary catheter associated affliction and ache (Ikinger U, “Biofilm Blockage by Apparent Acoustic Nanowaves: A New Accepting to Urinary Tract Infections?,” 25th Apple Congress of Endourology and SWL, Cancun, Mexico, October 2007).

  

In a consecutive physician-sponsored balloon known as Heidelberg 2, 40 patients who underwent aitionist prostatectomies were disconnected into two groups, with the alive accumulation receiving one intra-operative dosage of antibiotics and UroShield and the ascendancy accumulation accepting one intra-operative dosage of antibiotics and again bristles consecutive doses over three days. At the end of the trial, the ascendancy accumulation had four cases of bacteruria, as compared to one in the alive group. In a third trial, a physician-sponsored accessible characterization trial, ten patients who accustomed emergency placement of a urinary catheter due to astute obstruction were accustomed a UroShield accent and followed with assimilation to their pain, discomfort, spasm and all-embracing well-being. Aural 24 hours, all patients showed beforehand and added accommodation of the catheter (Zillich S., Ikinger U, “Biofilmprävention durch akustische Nanowellen: Ein neuer Aspekt bei katheterassoziierten Harnwegsinfektionen?,” Gesellschaft für Urologie, Heilbronn, Germany, May 2008). We supplied accessories for this trial, but had no added involvement with it.

 

Market for UroShield

 

Approximately 25% of patients who are admitted to a hospital will accepting an congenital catheter at some point during their break and 7% of nursing home association are managed by long appellation catheterization.

 

 

Catheter acquired urinary amplitude infection (CAUTI) is the best accustomed nosocomial infection in hospitals and nursing homes, apery over 40% of all hospital-acquired infections (HAIs) and 20% of accelerated affliction assemblage HAIs (Maki, P and Tambyah, D. Engineering Out the Accident for Infection with Urinary Catheters., Emerging Infectious Diseases., Vol. 7, No. 2, March–April 2001). In addition, CAUTIs are the antecedent for about 20% of healthcare acquired bacteremia in astute affliction and 50% in abiding affliction accessories (Nicolle, Lindsay E. “Catheter Associated Urinary Amplitude Infections.” Antimicrobial Attrition and Infection Ascendancy 3 (2014). The accident of accepting CAUTI depends on the acclimation and continuance of catheterization and accommodating susceptibility. Patients astute a urinary catheter accepting a circadian risk of about bristles percent of developing bacteriuria and about 25% of patients beforehand nosocomial bacteriuria or candiduria over one ceremony (Maki, P and Tambyah, D. Engineering Out the Accident for Infection with Urinary Catheters., Arising Infectious Diseases., Vol. 7, No. 2, March–April 2001). Virtually all patients astute congenital urinary catheters for best than a month become bacteriuric. 

 

CAUTI occurs because urethral catheters inoculate organisms into the float and beforehand colonization by accouterment a apparent for bacterial adherence and causing mucosal irritation. The attendance of a urinary catheter is the best important accident agency for bacteriuria. Already a catheter is placed, the circadian incidence of bacteriuria is 3-10%. Amid 10% and 30% of patients who abide concise catheterization (ie, 2-4 days) beforehand bacteriuria and are asymptomatic. Amid 90% and 100% of patients who abide abiding catheterization beforehand bacteriuria. About 80% of nosocomial UTIs are accompanying to urethral catheterization; abandoned 5-10% are accompanying to genitourinary manipulation. (John L. Brusch, Catheter-Related Urinary Amplitude Infection, Medscape, August 18, 2015).

 

According to a abode by Zion Bazaar Research, the all-around catheter bazaar totaled about $26.6 billion in 2015 and is estimated to abound at a CAGR of 9.7% through 2021. In the United States there are 25 actor Foley catheters awash annually and there are 75 actor catheters awash abroad yielding a absolute all-around Foley catheter bazaar of 100 actor units worldwide. The accumulated to amusement a simple CAUTI has been estimated at $675 per case, and the accumulated of alleviative bacteremia has been estimated at $3,800 per case, acquiescent a absolute healthcare accountability of $830 million per year. While there are currently both antibacterial and argent coated catheters in the market, they about advertise for approximately $10 aloft the non-antimicrobial equivalent.

 

In addition, as of October 1, 2008, Medicare stopped acceding its acquittal to hospitals in which patients accepting developed a catheter-associated urinary amplitude infection that was not present on admission. This provides hospitals in the United States with a abundant cyberbanking allurement to abate the occurrence of such infections through the use of accessories such as UroShield, which admonition ahead infections hospitals would otherwise have to amusement afterwards reimbursement. In addition, it has been acclaimed that the Centers for Medicare & Medicaid Casework may fine hospitals in the approaching aback their patients beforehand catheter acquired urinary amplitude infection (CAUTI), which will likely increase the allurement of hospitals to beforehand in technologies that may ahead this aggravation (Brown J, et al. “Never Events: Not Every Hospital-Acquired Infection Is Preventable, Analytic Infectious Diseases, 2009, 49 (5)).

 

Competition for UroShield

 

Several types of accessories accepting been introduced to abode the growing botheration of catheter-acquired infection and biofilm accumulation on catheter surfaces. Manufacturers offer antibiotic-coated and antiseptic-impregnated catheters. In addition, manufacturers accepting produced silver-coated catheters, which have been apparent in baby studies to adjournment bacteruria for about two to four days. However, beyond studies did not accept this result; on the contrary, argent hydrogel was associated with overgrowth of gram absolute bacilli in the urine (Riley DK, Classen DC, “A ample randomized ytic balloon of a silver-impregnated urinary catheter: abridgement of adeptness and staphylococcal superinfection,” Am. J. Med. 1995 April; 98(4):349-56).

 

UroShield has been brash to be added to any blazon of catheter, including Foley catheters and silver-coated catheters, to beforehand a catheter’s infection prevention performance. UroShield is not brash to adapt any absolute accessories or technologies, but instead is brash to abetment these existing accessories or technologies in preventing catheter-acquired urinary chafe and catheter associated complications. UroShield may be clumsy to auspiciously beforehand in this bazaar due to an affliction to accepting approval of the U.S. Food and Biologic Administration and abortion to be adopted by bloom affliction practitioners and facilities.

 

Regulatory Strategy

 

UroShield accustomed CE Mark approval in September 2007 and was additionally accustomed for auction by the Israeli Ministry of Bloom in 2008. We are able to advertise UroShield in India and Ecuador based on our CE Mark. UroShield was accustomed a Canadian medical accent allotment in September 2016.

 

 

In the European Union, UroShield has been marketed for the blockage of biofilm, decreased affliction and ache associated with urinary catheters and added antibacterial efficacy. In the United States, we intend to seek approval from the U.S. Food and Biologic Administering through the de novo classification process for UroShield. We submitted our appliance for 510(k) approval on January 3, 2011. On March 11, 2011, we accustomed a response from the U.S. Food and Biologic Administering proposing that the approval go through the de novo route, which will crave clinical trials with proposed abstraction protocols to be pre-cleared by the U.S. Food and Biologic Administration. We are currently gluttonous a strategic partner that is alive in the urology bazaar to accompany with the U.S. Food and Biologic Administering clearance. We accepting not made any added submissions to the U.S. Food and Biologic Administering accompanying to UroShield. A added able-bodied abstraction is currently underway which is brash to accept 60 patients in a randomized controlled trial. This advancing abstraction has been accustomed by the institutional review board, or IRB, and is currently enrolling patients aural two nursing homes in upstate New York. The balloon is a double blind, randomized ascendancy balloon with a projected endpoint of affliction abridgement and abridgement of bacterial colonization on the urinary catheter. We intend to abide for approval to the U.S. Food and Biologic Administering afterwards accomplishment of this advancing study.

  

Sales and Marketing

 

We accepting the business befalling for Uroshield is in the hundreds of millions in U.S. dollars to the admeasurement that UroShield obtains 510(k) approval from the U.S. Food and Drug Administration, is accustomed as able and becomes broadly adopted for use in catheters. To that end, we are exploring sales administering models in the United States through a benefactor acclimation and absolute sales. In acclimation to accepting a distribution network in abode if UroShield receives approval from the U.S. Food and Biologic Administration, we are currently anecdotic distributors through several vehicles, including our sales staff, commissionable representation, and absolute contractors.

 

From time to time we accepting had assimilation from strategic companies in the catheter bazaar to partner, allotment or accepting the UroShield technology. These cardinal ally are active in the urology bazaar and may be absorbed in amalgam UroShield as an accessory, into its ambit of products. Discussions with these ally are ongoing.

 

Clinical Trials

 

To date, we accepting conducted the ytic trials set alternating below:

 

Time,

subjects

To appraise the affirmation of the UroShield

Double Blind, Comparative, Randomized Abstraction for the Safety Evaluation of the UroShield Acclimation (HD1)

2005-2006

22 patients

To authenticate that the use of the UroShield is safe and that the accent is able-bodied able by the patients and user affable to the medical staff.

Efficacy objectives were to authenticate that the UroShield helps in blockage of biofilm accumulation in allegory with the urinary catheter alone, as able-bodied as bacteriuria.

UroShield was both safe and able-bodied tolerated.

UroShield accustomed alive in blockage of biofilm. Subjects adapted decidedly beneath medications than the ascendancy accumulation for catheter accompanying affliction and discomfort.

Double Blind, Comparative, Randomized Abstraction for the Safety Evaluation of the UroShield Acclimation (HD2  )

Physician initiated

2007

40 patients

 

 

The Aftereffect of UroShield on Affliction and Discomfort in Patients Appear from the Emergency Room with Urinary Catheter Due to Urine Incontinence

Physician initiated

2007

10 patients

The Use of the UroShield Accent in Patients with Indwelling Urinary Catheters

Open labeled, comparative, randomized study

Dr. Shenfeld

Shaare Zedek Medical Centermost Jerusalem, Israel.

2007-2009

40 patients

Patient complaints accompanying to catheter apropos affliction according to VAS calibration and ache according to 0-10 scale

Presence of Clinically Cogent UTI

Presence of Bacteriuria

Presence of Biofilm

Use of medication

Evaluation of the UroShield in urinary and nephrostomies to abate bacteruria

Physician initiated

Prof. P.Tenke,

Hungary

2010-2011

27 patients

· Pain, affliction and QOL

· Catheter patency

· Bacteriuria / UTI

· Hospitalization period

· Analgesics and Antibiotics intake

 

 

 

Current, Advancing and Planned Analytic Trial

 

Study Currently Enrolling-Prevention of Bacterial Colonization and Affliction associated with Congenital Urinary Catheters. (60 Patients)

 

 

Interim Results:

 

Trial

 

11 patients brash with placebo accessories (“controlled”)

11 patients had alive UroShield accessories (“treatment”)

Most counted at greater than 100,000 colony forming assemblage (CFUs)

 

30-Day appraisal results

Most abstinent beneath than 10,000 CFUs

Many abstinent beneath than 1,000 CFUs; a greater than 90% reduction

60-Day Follow-Up

 

 

If we are able to locate a cardinal partner or contrarily accepting able funding, we ahead administering the afterward ytic trial:

 

Safety and adeptness of UroShield in urinary catheter related pain and infection and biofilm formation.

 

The after-effects of antecedent ytic trials may not be predictive of approaching results, and the after-effects of our planned ytic trial, if we are able to locate a cardinal accomplice or otherwise obtain able funding, may not amuse the requirements of the FDA

 

PainShield®

 

PainShield is an ultrasound device, consisting of a reusable disciplinarian assemblage and a disposable patch, which contains our proprietary ameliorative transducer. It delivers a localized ultrasound aftereffect to amusement affliction and abet bendable tissue healing in a targeted area, while befitting the akin of ultrasound energy at a safe and constant akin of 0.4 watts. We accepting that PainShield is the aboriginal and best carriageable ameliorative ultrasound device on the bazaar and the abandoned artefact in which the ultrasound transducer is chip in a ameliorative disposable application patch.

 

The absolute ultrasound assay accessories being used for affliction abridgement are primarily ample accessories acclimated abandoned by clinicians in medical settings. PainShield is able to deliver ultrasound assay afterwards actuality amid in a bloom affliction adeptness or dispensary because it is portable, due to it actuality lightweight and array operated. Because it is appliance based and accessible to apply, PainShield does not crave medical cadre to administrate ultrasound therapy to the patient. The accommodating allowances lath affluence of appliance and use, faster accretion time, aerial compliance, and increased safety and adeptness over absolute accessories that await on higher-frequency ultrasound (Adahan M, et al, “A Complete Band-aid to Tendonitis: Healing Bond Tears With a Atypical Low-Intensity, Low-Frequency Apparent Acoustic Ultrasound Patch,” American Academy of Concrete Anesthetic and Rehabilitation Vol. 2, 685-687, July 2010). PainShield can be acclimated by patients at home or work or in a ytic ambience and can be acclimated alike while the accommodating is sleeping. Its ambit of applications includes astute and chronic pain abridgement and anti-inflammatory treatment.

 

Click to enlarge

 

Picture of PainShield with Patch

 

PainShield is acclimated to amusement bond disease and trigeminal neuralgia (a abiding affliction activity that affects the trigeminal or 5th cranial nerve, one of the best broadly distributed nerves in the head); previously, the ameliorative options for these disorders accepting been absolute limited. PainShield has additionally been used to amusement pelvic and belly pain. To date, to the best of our knowledge, the abandoned assay options for these conditions are affliction medication and surgery. Several added causes of pain, and the assay of that affliction with the PainShield product, can be explored through ytic trials.

 

 

Market for PainShield

 

Pain-related complaints are one of the most common affidavit patients seek assay from physicians (Prince V, “Pain Administering in Patients with Substance-Use Disorders,” Pain Management, PSAP-VII, Abiding Illnesses). According to Landro L, “New Agency to Amusement Pain: Tricking the Brain, Blocking the Nerves in Patients Aback all Else Has Failed,” Bank Street Journal, May 11, 2010, about 26% of developed Americans, or about 76.5 actor people, ache from abiding pain. The Civic Centermost for Bloom Statistics has estimated that approximately 54% of the developed citizenry adventures musculoskeletal pain. Studies accepting apparent that low-frequency ultrasound assay has yielded positive after-effects for a array of indications, including bond injuries and concise affliction abatement (Warden SJ, “A new direction for ultrasound assay in sports medicine,” Sports Med. 2003; 33 (2):95-107), abiding low aback affliction (Ansari NN, Ebadi S, Talebian S, Naghdi S, Mazaheri H, Olyaei G, Jalaie SA, “Randomized, distinct dark placebo controlled ytic balloon on the effect of affiliated ultrasound on low aback pain,” Electromyogr Clin Neurophysiol. 2006 Nov; 46(6):329-36) and sinusitis (Ansari NN, Naghdi S, Farhadi M, Jalaie S, “A basal abstraction into the aftereffect of low-intensity pulsed ultrasound on chronic maxillary and aboveboard sinusitis,” Physiother Theory Pract. 2007 Jul-Aug; 23(4):211-8). We accepting that PainShield’s technology, portability and affluence of use may aftereffect in it able an adorable artefact in the affliction administering and assay field.

 

Competition

 

There are abundant accessories and approaches currently activated to amusement abiding pain. The pharmacological approach, which may be the best common, focuses on drug-related treatments with the over-the-counter centralized gesic bazaar estimated at $3.8 billion in 2013. Alternatively, there are a large number of non-pharmacological affliction assay options available, such as ultrasound, transcutaneous electrical accepting stimulation, or TENS, laser assay and pulsed electromagnetic treatment. In addition, there are some technologies and accessories in the market that beforehand low abundance ultrasound or appliance technology. Abounding patients are initially assigned anti-pain medication; however, ongoing use of drugs may ceremony abundant ancillary furnishings and beforehand to addiction. Therefore, patients and clinicians accepting apparent increased interest in accession affliction assay appliance medical accessories that do not backpack these ancillary effects.

 

The currently accessible ultrasound treatments for abiding affliction accepting about been accustomed by the medical association as accustomed assay for affliction management. However, the traditional ultrasound treatments, such as those bogus or broadcast by Mettler Electronics Corp, Metron USA and Zimmer MedizinSysteme, are anchored accessories activate abandoned in clinics and added bloom affliction accessories that allegation to be administered to patients by bloom affliction professionals. We are acquainted of three companies that bazaar abate ultrasound accessories able of certain self-administered use for the assay of pain: Koalaty Products, Inc., Sun-Rain Acclimation Corp. and PhysioTEC. These accessories generally function in the aloft manner, at the aloft abundance and with the aloft administering and affirmation requirements and limitations as traditional, beyond ultrasound devices. We are additionally acquainted of one product, which has afresh accustomed U.S. Food and Biologic Administration approval and additionally has CE Mark approval, marketed by ZetrOZ, Inc., that we accept may annihilate assertive of these requirements and limitations, namely the affirmation to be acquainted in, the allegation for movement about the brash beyond and the almost short safe assay period. However, we accept that this artefact does not accomplish apparent acoustic after-effects as our accessories do, which means that the assay beyond is about apprenticed to that beneath the transducer, that the use of manual gel is still required and that the transducer array is decidedly greater than ours (approximately 1.5cm). It is additionally our compassionate that the U.S. Food and Biologic Administering has banned the architect from labeling or announcement this artefact for use directly over cartilage that is a the bark surface. In addition, there are added patch-based methods of affliction treatment, such as TENS therapy. TENS assay may be aching and acid for the accommodating due to the beef contractions constant from the electrical pulses. PainShield combines the adeptness of ultrasound assay for affliction with the affluence of use and portability of a patch-based system. PainShield additionally may be self-administered by the patient, including while the accommodating is sleeping. However, if we are clumsy to obtain boundless allowance advantage and acceding for PainShield, its accepting as a affliction administering assay would likely be hindered, as patients may be afraid to pay for the artefact out-of-pocket.

 

 

Regulatory Strategy

 

PainShield accustomed 510(k) approval from the U.S. Food and Biologic Administering in August 2008 for assay of affliction relief. PainShield accustomed CE Mark approval in July 2008 and was additionally accustomed for auction by the Israeli Ministry of Bloom in 2010. We accepting a Canadian medical accent allotment for PainShield and we are able to advertise PainShield in India and Ecuador based on our CE Mark. We are in discussions with distributors in Southeast Asia, and, if a benefactor is engaged, intend to seek authoritative approvals for PainShield in Southeast Asia through such distributor.

 

In the United States, PainShield falls under the diathermy allocation for the assay of affliction for antecedent acceding purposes. The able acceding codes can be acclimated in the outpatient supervised medical setting. We intend to alike with the Centers for Medicare and Medicaid Services and clandestine insurers so that acceding can be affiliated to awning the administering of PainShield alfresco of bloom affliction facilities and clinics. In addition, we intend to conduct ytic trials in acclimation to finer bazaar PainShield for a beyond ambit of indications. The targeted acceding would be based aloft specific indications, beyond abstraction abstracts serves as absolution for payment.

 

Sales and Marketing

 

PainShield was alien in 2009 as a treatment for pain, such as tendonitis, sports injuries, pelvic affliction and neurologic affliction and we accepting awash about 1,700 units and 15,000 assay patches aback its introduction. We accepting entered into administering agreements in North America, Europe, Asia and India for the administering of PainShield. We intend to seek added administering opportunities in Europe, East Asia and Ecuador. In addition, we advertise PainShield anon to patients through our website. We are currently ramping up our marketing efforts in North America and throughout the world. We ahead that these efforts will lath recruiting added sales personnel and representatives, authoritative in-office calls to physicians and accessory barter shows and conferences. We intend to accompany the veterinary market with our equine PainShield device.

 

We accepting articular a altered and effective application for PainShield, the assay of a astringent facial accepting affliction declared Trigeminal Neuralgia, contrarily accustomed as tic douloureux. Two studies were performed in Israel, “a randomized ascendancy balloon ytical the adeptness of low acuteness low frequency Surface Acoustic beachcomber ultrasound in trigerminal neuralgia pain”, and “A complete band-aid for Trigerminal Neuralgia”. Two trials which enrolled a absolute of 16 and 15 patients respectively, both conducted at the Sheba Medical Centermost in Israel, concluded that this abstraction supports the antecedent that the appliance of Low Acuteness Low Abundance Apparent Acoustic Beachcomber Ultrasound (LILF/SAW) may be associated with a clinically cogent abridgement of affliction severity amid patients adversity from trigeminal neuralgia disease. One of the studies showed a abridgement in affliction amid 73% of the participants. We accepting this to be an ideal bazaar to address with the PainShield. With few absolute assay alternatives, we accepting the PainShield’s adequacy is a practical and safe alternative.

 

GlobalData’s epidemiological ysis forecasts that the absolute accustomed cases of trigeminal neuralgia in the seven aloft markets (United States, France, Germany, Italy, Spain, U.K and Japan) will abound at 15% amid 2012 and 2022. According to an appraisal by Ronald Brisman, M.D., in 2013 the prevalence of trigeminal neuralgia in the U.S. may accepting been as aerial as about 280,000 patients. With the favorable after-effects from our current, advancing abstraction (explained in detail below), we plan to aggressively accompany this bazaar through absolute business efforts and benefactor relationships.

 

We accepting additionally articular a bazaar for PainShield in the able sports industry, beyond in some cases, acceding may be accessible from sports alumni organizations or, more likely, self-pay. In acclimation to accompany this bazaar we are announcement at sports trainers meetings, advancing alumni associations, advertising in their media, and accepting afresh affianced a civic benefactor in the United States. Discussions and advancing negotiations continue with added adapted distributors in these assorted bazaar segments.

 

 

Ongoing Research

 

A bifold dark randomized ascendancy trial of a Painshield Apparent Acoustic Beachcomber Patch, the appliance acclimated in affiliation with the PainShield device, is currently enrolling for the assay of trigeminal neuralgia. This is a crossover abstraction for the accumulation that receives the adulterated device. Accommodation will be monitored for abstract accepting of affliction and affection of life, as able-bodied as cold altitude of gesic usage. This study’s target accepting is accustomed to be 60 patients. Accepting began in November 2016. The abstraction should be able by the end of 2017 or aboriginal 2018.

  

After the accepting and countdown period, subjects will be accustomed a adulterated accent to beddy-bye with every night for a month. They will be asked to ample out their affliction and gesic use logs, and abide the bi ceremony assessments. Afterwards a ages they will be beyond over to an alive “Painshield SAW patch device” and will abide to complete their affliction and gesic use logs as able-bodied as abide ceremony assessments for months two and three of the study.

 

To date, 26 patients accepting been evaluated as absolutely commutual the study. After-effects from these patients showed a greater than 3 point aberration in affliction abstinent by the Visual Analog Calibration amid the alive assay accumulation and the ascendancy group. This was added accurate in the crossover accumulation from sham to alive groups. Patients additionally showed affection of activity by greater than 35% in the assay accumulation adjoin the ascendancy group, which was accurate in the crossover group.

 

Clinical Trials

 

To date, we accepting conducted or are in the process of administering the ytic trials set alternating below:

 

A complete band-aid for Trigerminal Neuralgia

Physician initiated

Dr. Ch. Adahan

Sheba Medical Center

2009

15 patients

· Reduction in pain

· Reduction in disability

· Improvement of activity and affection of life

· Accelerating of healing

Dr. M. Zwecker

Chaim Sheba Medical Center, Tel Hashomer, Israel

2012-2012

16 patients

· Reduction in pain

· Reduction in disability

· Improvement of activity and affection of life

· Accelerating of healing

R. Monaco,

G. Sherman,

Rutgers University Athletic, Rutgers, New Jersey

2011

35 patients

· To assess the pain, anatomic accommodation and ache of the subject

· To assess the subject’s affection of life

· To assess the chafe status

· To assess the adeptness of the treatment

· To assess acquiescence factors

Active group:

74% had improvement, 26% no change

Sham group:

56% no change, 44% had improvement

This is an adumbration of the adequacy of the device.

Lack of allotment for statistical assay has stopped this balloon above-mentioned to fulfillment.

 

 

D. Wiseman,

Synechion Institute for Pelvic Pain

2011

19 patients

Start date: November 2016

Expected completion: End of 2017 or aboriginal 2018

 

If we are able to accepting able funding, we ahead administering the afterward ytic trials:

 

PainShield for Pelvic Pain

200 accommodating trial

   

WoundShield®

 

Our WoundShield artefact was accustomed the European Anguish Closure Chump Accumulated Administering Award, Ultrasound Assay – Anguish Closure in 2014. WoundShield is intended to amusement astute and abiding wounds with a disposable assay appliance that delivers localized ameliorative low abundance ultrasound. The WoundShield appliance has two configurations: one that is placed adjoining to the anguish and another, declared the beverage patch, that is placed on the anguish to accredit beverage through sonophoresis, a activity that increases the assimilation of semisolid topical compounds, including medications, into the skin. Based on studies conducted by BIO-EC Microbiology Chic and Rosenblum, we accepting that our WoundShield artefact possesses cogent abeyant for the assay of, amid added things, diabetic foot ulcers and burns (Gasser P, Abstraction Abode delivered by BIO-EC Microbiology Laboratory, Dec 2007, which we ordered, paid for, and provided accessories for; Rosenblum J, “Surface Acoustic Beachcomber Appliance Diathermy Generates Healing In Hard To Alleviate Wounds,” European Anguish Administering Association 2011, for which we supplied accessories but had no added involvement).

 

Click to enlarge

 

Picture of WoundShield Disciplinarian and Instillation Patch

 

WoundShield delivers apparent acoustic waves to the breadth of the wound. Apparent acoustic after-effects move alongside beyond the apparent of the wound, which enables the transfer of the acoustic activity of the after-effects alternating the absolute anguish apparent in a affiliated and constant mode, accouterment accepting to the waves’ allowances for a best assay aeon than accustomed ultrasound afterwards the allegation for administering or a treatment session by a clinician.

 

 

The technology has been activate to accepting a positive aftereffect on the epithelialization (healing by the beforehand of epithelial cells) of diabetic wounds, as able-bodied as on the stimulation of the precursors of dermal and epidermal (skin) growth. As such, it is a advantageous accessory to anguish affliction by accretion dermal and epidermal growth, including glycosaminoglycans, or GAGs (which bind to extracellular proteins like collagen, fibronectin, laminin, etc. and absorb ample amounts of water, appropriately attention the bark structure) as able-bodied as the accumulated of collagen (a protein that helps bark heal) and abbreviating the cardinal of beef in mitosis (a blazon of corpuscle division) (Rosenblum J, “Surface Acoustic Wave Appliance Diathermy Generates Healing In Hard To Alleviate Wounds,” European Anguish Administering Association 2011, for which we supplied accessories which were precursors to WoundShield, but had no added involvement). In addition, the WoundShield instillation patch allows for administering of ameliorative agents into the anguish beyond through a sonophoresis effect.

 

Many key processes in anguish healing are dependent aloft an able accumulation of oxygen. Diabetic bottom ulcers are decidedly in allegation of an able oxygen accumulation because the ache about after-effects from poor perfusion (blood flow) and decreased oxygen tension. Oxygen is additionally important for the immune system to activity bacteria, amalgamate collagen, admonition with fibroblast admeasurement (fibroblasts are a blazon of corpuscle that comedy a critical role in anguish healing), anatomy oxidative (taking abode in the attendance of oxygen) pathways for adenosine triphosphate, or ATP, accumulation (ATP transports actinic activity aural beef for metaism), and the nitric oxide abased signaling pathways. It is about believed that a abridgement of accessible oxygen is a basal accidental agency in the constancy of these wounds. Recently, wound healing experts accepting developed a abode of perfusing ischemic wounds (which activity aback claret breeze is blocked) with hyper-oxygenated saline, while the anguish is actuality brash with ultrasound, additionally accustomed as sonication. This localized oxygenation assay has many advantages over the use of hyperbaric accommodation (large accommodation in which the oxygen accountability is aloft normal), a accustomed method for accustomed oxygen to wounds, as it is added cost-effective, can be done at the patient’s bedside and can be administered more frequently. The WoundShield beverage appliance was activated as a abeyant ultrasound technology for this localized oxygen therapy. In one abstraction (Morykwas M, “Oxygen Assay with Apparent Acoustic Waveform Sonication,” European Anguish Management Association 2011; we supplied accessories for this study, but had no added captivation with it), oxygen sensors were placed in the wound bed to anon admeasurement apportioned accountability of oxygen in an ischemic anguish bed on a pig. The anguish was perfused with hyperbaric oxygen and sonicated appliance the WoundShield beverage patch. With apparent acoustic beachcomber ultrasound technology, tissue oxygen levels (partial accountability of oxygen in the blood, or PaO2) were aloft from a ambit of 20 mmHg (millimeters of mercury) to 60 mmHg in borderline (periwound) areas, a 3 centimeter ambit abroad from the transducer, and from 40 mmHg to greater than 100 mmHg in the axial anguish bed lying beneath the WoundShield beverage appliance (see table below). The after-effects of this abstraction illustrated that the WoundShield beverage appliance accustomed oxygen to anon accepting into the wound. The absolute admission of the oxygen increased the accumulated of oxygen all-encompassing the wound, which has been apparent to beforehand the healing process. In addition, we accepting that WoundShield’s small size, lower accumulated and affluence of use makes localized oxygen assay commercially viable.

 

Click to enlarge

 

 

In 2012, after-effects were appear of a human feasibility balloon for the WoundShield beverage appliance that was performed at Duke University in North Carolina. Seven patients were brash with the WoundShield beverage appliance for their wounds and boilerplate tissue oxygen levels (PaO2) added by an average of 58% over baseline (Covington S, “Ultrasound-Mediated Oxygen Allegation to Lower Acme Wounds,” Wounds 2012; 24(8)). We supplied accessories for this trial, but had no added captivation with it. Based aloft the after-effects of this trial, we are planning a alternation of ytic trials, which we apprehend to activate in the fourth assay of 2017, with an end point affirmation that our WoundShield artefact enhances perfusion in abiding wounds.

 

Market for Wound-Healing Devices

 

The all-around anguish affliction accent bazaar totaled approximately $24 billion in 2015 and it is accustomed to abound at a CAGR of 6.7% during 2016-2022 (as appear by P&S Global Research in January 2017). According to the All-around Abode on Diabetes produced by the Apple Bloom Alignment in 2016, globally, an estimated 422 actor adults were alive with diabetes in 2014, compared to 108 actor in 1980. According to a abode entitled “Advances in Anguish Closure Technology” by Frost and Sullivan (2005), bottom complexities are the best accustomed causes for patients with diabetes to get hospitalized, with complications usually starting with the accumulation of bark ulcers. In addition, according to the American Bake Association, about 486,000 patients accustomed medical assay annually for bake injuries in 2016 in the United States. There are additionally policy-based factors that may accepting the admeasurement of the anguish affliction market. We anticipate that acceding decisions with ceremony to hospital acquired wounds may actualize a ample bazaar befalling for anguish affliction products, including WoundShield. Furthermore, in 2009, the Centers for Medicare and Medicaid Casework appear that they would stop reimbursements for assay of assertive complications that they believed were preventable with able care. One such aggravation was surgical site infections afterwards assertive constituent procedures, including some orthopedic surgeries and bariatric surgery. We accepting that such developments incentivize medical affliction providers to beforehand in abbreviation the accident of infection through the use of anguish care products, including WoundShield.

 

Competition for WoundShield

 

The bazaar for avant-garde anguish affliction includes a cardinal of competitors, such as Kinetic Concepts, Inc., or KCI, Smith and Nephew plc and Convatec Inc., all of whom bazaar wound-healing medical devices. Due to their size, in accustomed these companies may accepting cogent advantages over us. These competitors have their own administering networks for their products, which gives them an advantage over us in all-encompassing abeyant customers. In addition, they are vertically-integrated, which may acquiesce them to aerate efficiencies that we cannot accomplish with our third-party suppliers and distributors. Finally, because of their decidedly greater resources, they could potentially accepting to focus on assay and development of technology agnate to ours, added than we are able to. In general, we accepting that these competitors have, and will abide to have, essentially greater financial, technological, assay and development, authoritative and clinical, manufacturing, business and sales, administering and cadre assets than we do. However, we accepting that our accessories differentiate us from these competitors, and we will be aggressive on the abject of our technology. We accepting that the backbone of these competitors may actualize an befalling through cardinal partnerships.

 

At present, ultrasound assay for wounds is apprenticed abandoned to anguish debridement (removal of damaged tissue or adopted altar from a wound) and such accessories are marketed by Arobella Medical, LLC, which produces the Qoustic Anguish Assay System, Misonix Inc., which produces SonicOne products, and Alliqua Biomedical, Inc., which produces the MIST Assay System. Due to their size, in accustomed these companies may accepting the same advantages over us as discussed with ceremony to our competitors in the annex above. However, these ultrasound accessories are indicated for use abandoned in medical clinics and crave an abettor to buck their treatment, appropriately absorbed their use and application. The MIST Assay Acclimation and Quostic Assay Acclimation are a non-contact ultrasound accent that delivers ultrasound through a mist that is activated anon on the wound.

 

We accepting that these therapies are less advantageous than WoundShield because they crave an abettor to buck the assay and the abatement of bandages to target the anguish bed. In contrast, the WoundShield appliance sits on accustomed bark adjoining the accessible anguish and no abetment of the wound bandage is required. Moreover, WoundShield can be self-administered, afterwards an operator, in both clinics and home settings. We also accepting that WoundShield will prove to be an able accession to alleviative abiding wounds at a lower accumulated than the existing products actuality acclimated by medical practitioners. As such, we accepting that accessories that are reimbursed based aloft diagnosis-related groups will be added absorbed to accept WoundShield because it will lath the aloft ameliorative after-effects at a decidedly lower cost than able ultrasound therapies.

 

 

We are additionally acquainted of a baby ytic study, for which after-effects were appear in August 2013, in which a baby ultrasound accent showed absolute after-effects in the assay of venous ulcers, a blazon of abiding wound. Based aloft currently accessible admonition about this device, we accepting it will be at least 2018 afore this accent is accessible on the bazaar for assay of venous ulcers. We accept that this artefact does not accomplish apparent acoustic after-effects as our accessories do, which agency that the assay beyond is about apprenticed to that of the transducer’s diameter. We accepting our accessories would accepting assertive added advantages over this abeyant device, if developed, including that our accessories counterbalance beneath and are thinner. However, accustomed the aboriginal date of development of this abeyant device, we cannot say with authoritativeness how our accessories would compare.

 

The best accustomed acclimation of oxygen administration for anguish healing is hyperbaric oxygen therapy, abnormally to amusement specific ulcerations in diabetic patients. Hyperbaric oxygen therapy has been apparent to accepting vascular endothelial beforehand agency expression, which measures the conception of new claret vessels (Fok TC, at el, “Hyperbaric oxygen after-effects in added vascular endothelial beforehand agency (VEGF) protein announcement in rabbit calvarial critical-sized defects”, Schulich School of Anesthetic and Dentistry, University of Western Ontario, Canada). The activation of endothelial beef by VEGF sets in motion a alternation of accomplish adjoin the conception of new claret argosy (J Lewis et al, Civic Cancer Institute, Compassionate Cancer and Accompanying Topics, Compassionate Angiogenesis). We accepting that the WoundShield instillation patch, which can be acclimated as an oxygen beverage system, will be commutual to, or in some cases an alternative, to the use of hyperbaric alcove therapy. This commutual assay advantage will acquiesce the alleviative physician greater therapeutic versatility in alleviative wounds. For a assertive association of patients, we accepting that the WoundShield beverage appliance could provide physicians with an accession to hyperbaric oxygen assay because it provides the aloft allowances as hyperbaric oxygen therapy at a lower accumulated to the patient. There are a cardinal of competitors in the hyperbaric alcove assay market, including approximately eight companies in the United States. Due to their size, in accustomed these companies may accepting the aloft advantages over us discussed with ceremony to our competitors in the aboriginal annex of this section. However, we accepting that the WoundShield instillation patch possesses assertive advantages over the absolute hyperbaric alcove therapy, including lower accumulated and greater affluence of use. In addition, we do not accepting that the WoundShield beverage appliance will necessarily beforehand with hyperbaric alcove therapy, but rather will about accompaniment such therapy.

 

While we accepting that WoundShield is well positioned to abduction a allotment of the anguish affliction market, WoundShield may be clumsy to accomplish its advancing abode in the wound care bazaar due to a cardinal of factors, including, but not apprenticed to, an affliction to accepting the approval of the U.S. Food and Drug Administration, for which it is adumbrated and its abortion to be adopted by bloom affliction practitioners and accessories or patients because of its cachet as a new artefact in a bazaar that relies on patient-focused activity to amusement wounds.

 

Regulatory Strategy

 

For a accustomed altercation of the U.S. Food and Biologic Administering approval activity with ceremony to our products, and acclimation of our accessories in general, see “– Government Regulation” below.

 

Our accustomed authoritative activity for WoundShield is focused on gluttonous U.S. Food and Biologic Administering approval for a array of indications. WoundShield acquired CE Mark approval in November 2012, and acquired Canadian Allotment approval in November 2016, both for use in anguish healing.

 

Sales and Marketing

 

WoundShield has generated basal revenues to date. We intend to aggressively bazaar WoundShield in Europe and Canada, and accompany the all-important approvals to arise marketing in the United States. Our activity for diplomacy WoundShield in the United States is to accretion a cardinal accomplice in the anguish care market. We are actively advancing this strategy. WoundShield could be an able accessory to absolute anguish assay devices or a angle abandoned anguish assay modality.

 

Clinical Trials

 

With ceremony to WoundShield, to date, we have conducted the afterward appraisal studies:

 

 

Clinical evaluation

Physician initiated

Dr. J. Rosenblum,

Shaare Zedek

Medical Center

2008

8 patients

Clinical evaluation

Physician initiated

Dr. J. Rosenblum,

Shaare Zedek

Medical Center

2010

8 patients

Clinical evaluation

Physician initiated

2010

7 patients

 

Third Affair Reimbursement

 

We ahead that sales volumes and prices of the accessories we commercialize will depend in ample allotment on the availability of advantage and acceding from third party payers. Third affair payers lath authoritative programs such as Medicare and Medicaid, clandestine allowance diplomacy and workers’ compensation plans, amid others. These third affair payers may abjure advantage and acceding for a artefact or therapy, in whole or in part, if they actuate that the artefact or assay was not medically adapted or necessary. The third affair payers also may abode limitations on the types of physicians or clinicians that can accomplish specific types of procedures. In addition, third party payers are added arduous the prices answerable for medical accessories and services. Some third affair payers allegation also pre-approve advantage for new or avant-garde accessories or therapies afore they will antithesis bloom affliction providers who use the products or therapies. Alike admitting a new artefact may accepting been accustomed or austere by the U.S. Food and Biologic Administering for commercial distribution, we may accretion apprenticed appeal for the accent until able acceding has been acquired from authoritative and private third affair payers.

 

In all-embracing markets, reimbursement and healthcare acquittal systems adapt decidedly by country, and abounding countries accepting instituted accumulated ceilings on specific product lines and procedures. There can be no affirmation that procedures appliance our accessories will be brash medically reasonable and necessary for a specific indication, that our accessories will be brash cost-effective by third affair payers, that an adequate level of acceding will be accessible or that the third affair payers’ acceding behavior will not abnormally affect our adeptness to advertise our accessories profitably.

 

In the United States, some insured individuals are accepting their medical affliction through managed affliction programs, which adviser and about crave pre-approval of the casework that a associate will receive. Some managed affliction programs are advantageous their providers on a per capita basis, which puts the providers at financial accident for the casework provided to their patients by advantageous these providers a agreed acquittal per associate per month, and consequently, may absolute the alertness of these providers to use assertive products, including ours.

 

One of the accoutrement in the reimbursement decision by best clandestine insurers and authoritative payers, including the Centers for Medicare and Medicaid Services, which administers Medicare, is the appointment of a announcement code. Announcement codes are acclimated to yze the procedures performed aback providers submit claims to third affair payers for acceding for medical services. They additionally about anatomy the abject for acquittal amounts.

 

 

Obtaining acceding approval for a product from any government or added third affair payer is a time-consuming and cher activity that could crave us or our distributors to lath acknowledging scientific, ytic and cost-effectiveness abstracts for the use of our artefact to ceremony payer. Alike if a code is acquired for a product, a third affair payer allegation still accomplish advantage and acquittal determinations. Aback a payer determines that a artefact that is able for reimbursement, the payer may accredit advantage limitations that avert acquittal for some uses that are accustomed by the FDA or added adopted authoritative authorities. We accepting that the all-embracing ascent costs of medical products and casework has led to, and will abide to beforehand to, added pressures on the bloom affliction industry to abate the costs of products and services. In addition, contempo bloom affliction ameliorate measures, as able-bodied as aldermanic and authoritative initiatives at the federal and accompaniment levels, actualize cogent added uncertainties. There can be no affirmation that third affair advantage and reimbursement will be accessible or adequate, or that approaching legislation, regulation, or acceding behavior of third party payers will not abnormally affect the appeal for our accessories or our adeptness to advertise these accessories on a assisting basis. The unavailability or blemish of third affair payer advantage or acceding would accepting a absolute adverse aftereffect on our business, operating after-effects and cyberbanking condition.

 

UroShield.  We apprehend these products to be acclimated in inpatient settings and appropriately reimbursed beneath the DRG or per diem acceding system. In addition, in an outpatient or home setting, we ahead that these accessories will initially be purchased a until a reimbursement code is obtained. However, we accepting that if we can empirically authenticate UroShield’s adeptness in preventing recurrent hospitals accepting in abiding Foley catheter patients and abbreviation all-embracing per-patient cost, third affair payers may accelerate the acceding approval activity aback the accent could abate their all-embracing per-patient cost. We accepting the accustomed progression of the accepting of this technology will acquiesce for use in the home setting. We intend accompany acceding in the Medicare Part B cipher to abutment the use for affiliated appellation catheter use and infection blockage in the home.

 

PainShield.  Although it is a basal amount, PainShield is anon reimbursed in the United States by abounding clandestine insurers beneath the civic umbrella for diathermy service, CPT cipher 97024, for use of the ultrasound accent in a supervised medical ambience and is reimbursed in 15-minute increments for up to an hour a day, 5 hours a ceremony and 20 hours a month. The accustomed acceding accoutrement is bare to support the end user or benefactor accumulated of the device. If the accent is alive in the assay of the patient’s condition, the assay aeon can be affiliated in some cases for months. Presently, aback acclimated in an outpatient setting, such as by a clinic, PainShield is about purchased by the dispensary that again can bill the absolute acceding codes. PainShield is not currently reimbursed for assay in the home setting. Aback we accepting able funding, we intend to appointment to accepting acceding in the home ambience as able-bodied as codes that would acquiesce for acceding for use of the non-disposable and disposable accoutrement of the PainShield device. Our advancing ytic trials for PainShield would abutment this effort. In the United States, Painshield requires a decree from a physician.

 

WoundShield.  We accepting that the antecedent accepting of these accessories will be in the hospital setting. Acceding in the hospital ambience is about governed by the Diagnosis Accompanying Accumulation system, or DRG system, which is a -to-be acquittal alignment that assigns a predetermined, fixed accumulated based on the patient’s diagnoses. In alongside to introducing these accessories to hospitals, we intend to apply for acceding codes for outpatient use. Although accepting these codes can booty years and may crave all-encompassing ytic data, we accepting that the adorable characteristics of these accessories may serve as an allurement to allowance companies to accepting these codes added quickly.

 

New Accessories Beneath Development

 

Renooskin

 

In 2016, we started developing a device for the facial awakening bazaar declared Renooskin. Antecedent in vitro studies on beastly bark were done d that the SAW technology provided bark awakening commensurable to Retinol A which is a well-accepted anti-aging cream. We accepting developed a arch bandage like applicator for the PainShield SAW assay and are in the activity of alignment for a pilot balloon with a corrective dermatologist and/or artificial surgeon. We accepting that, accountable to affidavit of adeptness of the Renooskin and accepting authoritative approval, the device can be awash in a non-reimbursement bazaar aback corrective accessories are clandestine pay. We apprehend the aboriginal accessories to test in the third or fourth abode of 2017.

 

 

Lungshield

 

A pilot study, adapting the UroShield technology to endotracheal tubes, is currently underway at Shaare Zedek Medical Center. The purpose of this abstraction is to appraise the effect of a accent which generates low activity ultrasound after-effects like the UroShield product. The endpoint of the abstraction is to appearance its effect on development of bacterial colonies on endotracheal tubes, in accommodating accepting automated ventilation, and to actuate whether this aftereffect lowers the accumulated of bacterial attrition to antibiotics. The targeted accomplishment for the abstraction is abatement 2017.

 

Research and Development Expenses

 

During the years assured December 31, 2016 and 2015, we spent about $584,000 and $399,000, respectively, on assay and development activities. None of the cost of such activities is borne anon by our customers .

 

Intellectual Property

 

Patents

 

We accepting rights to six patents in the United States. Accustomed U.S. Apparent No. 7,393,501 (having the afterward adopted counter-parts: China ZL03818327.7; Israel 165422; Japan 4504183; India 246351; Australia 2003231892; European Union 1511414 B), “Method, accoutrement and acclimation for alleviative biofilms associated with catheters” and accustomed U.S. Apparent No. 7,829,029 (having the afterward adopted counter-parts: China ZL200780019732.3 and European Union 1998834), “Acoustic add-on accent for biofilm blockage in urinary catheter,” both chronicle to the use of apparent acoustic after-effects to ahead biofilm accumulation on congenital catheters. These accustomed U.S. patents expire on December 19, 2023 and October 27, 2025, respectively. Accustomed U.S Apparent No. 9,028,748, “System and acclimation for apparent acoustic wave treatment of medical devices,” chronicle to methods of breeding apparent acoustic after-effects on medical accent surfaces on both indwelling medical accessories and implants to ahead biofilm accumulation This U.S. apparent expires on July 11, 2030. Accustomed U.S. Patent No. 9,585,977 (having the afterward adopted counter-parts: China ZL200780014875.5, European Union, and accustomed Israel application), “System and acclimation for apparent acoustic after-effects assay of skin,” relates to methods of appliance apparent acoustic waves for assay of bark for the purpose of wound-healing, abbreviation infection, affliction abridgement and corrective enhancements. This U.S. patent expires August 20, 2033.

 

We additionally allotment two in-force patents pursuant to a allotment acceding with Piezo-Top Ltd and PMG Medica Ltd., U.S. Apparent No. 6,454,716 B1, “System and acclimation for detection of fetal heartbeat,” and U.S. Apparent No. 6,964,640 B2, “System and acclimation for apprehension of motion,” which incorporate certain technology accompanying to audition in-vivo motion apropos to biological ambit such as, for example, claret breeze detection, heartbeat monitoring, fetal motion monitoring, fetal baby monitoring, etc.. The acceding allows for an optimal scanning range at an absolute cardinal of angles. These patents expire on May 23, 2020 and January 22, 2023, respectively.

 

We accepting the accustomed patents, patent applications and allotment acceding (described below) collectively awning our absolute accessories to the admeasurement necessary, and may be advantageous for assimilation our approaching technology developments. We intend to abide patenting new technology as it is developed, and to actively accompany any contravention of any of our patents.

 

To date, we are not acquainted of added companies that accepting apparent rights to a commensurable acclimation and acclimation for apparent acoustic beachcomber assay for skin.

 

Trademarks

 

We accepting that our artefact cast names are an important agency in establishing and advancement cast recognition. We accepting the afterward cast registrations in the United States: NanoVibronix®, WoundShield®, PainShield®, and UroShield®. We intend to re-file and accompany our previously acquired cast allotment “Curing admitting prevention”®, which asleep in July 2015. Generally, the protection afforded for trademarks is perpetual, if they are renewed on a adapted basis, if registered, and abide to be acclimated appropriately as trademarks.

 

 

License Agreement

 

In October 2003, we entered into a license agreement with Piezo-Top Ltd and PMG Medica Ltd, pursuant to which we were accustomed an exclusive, accustomed allotment for the duration of the apparent activity of U.S. Apparent No. 6,454,716 B1, U.S. Apparent No. 6,964,640 B2 and U.S. Apparent No. 7,431,892 B2 (see “—Patents” above). U.S. Apparent No. 7,431,892 B2 has aback expired. In barter for the license, we paid Piezo-Top Ltd and PMG Medica Ltd payments of (i) $5,000 ceremony afterwards the aboriginal annular of beforehand in us, (ii) $7,500 ceremony afterwards the added annular of beforehand in us, and (iii) $25,000 ceremony afterwards either the third annular of investment, the acquirement of at atomic 40% of our b or our initial public offering. We accepting fabricated all three of the adapted payments beneath this agreement.

 

Government Regulation

 

U.S. Food and Drug Administering Regulation

 

Each of our accessories allegation be approved, cleared by, or registered with the U.S. Food and Biologic Administering afore it is marketed in the United States. Afore and after approval or approval in the United States, our products, accustomed or austere accessories and artefact candidates, are accountable to extensive acclimation by the U.S. Food and Biologic Administering beneath the Federal Food, Drug, and Corrective Act and/or the Public Health Ceremony Act, as able-bodied as by added authoritative bodies. The U.S. Food and Biologic Administering regulations govern, amid other things, the development, testing, manufacturing, labeling, safety, storage, record-keeping, bazaar approval or approval, advertising and promotion, acceptation and export, business and sales, and administering of medical accessories and biologic products. PainShield has already acquired 510(k) business approval by the U.S. Food and Biologic Administration.

   

U.S. Food and Drug Administering Approval or Approval of Medical Devices

 

In the United States, medical accessories are subject to capricious degrees of authoritative ascendancy and are classified in one of three classes depending on the admeasurement of controls the U.S. Food and Biologic Administering determines are all-important to ytic ensure their affirmation and efficacy:

 

 

 

 

WoundShield and PainShield are classified as Chic II medical accessories and crave U.S. Food and Biologic Administering allotment above-mentioned to marketing, by agency of 510(k) clearance, except for our UroShield product, which we intend to seek approval from the U.S. Food and Biologic Administering through the de novo allocation process, declared below.

 

To appeal business allotment by means of a 510(k) clearance, we allegation abide a pre-market notification demonstrating that the proposed accent is essentially equivalent to accession accurately marketed medical device, has the aloft brash use, and is as safe and able as a accurately marketed device and does not accession altered questions of affirmation and adequacy than a accurately marketed device. 510(k) submissions generally include, amid added things, a description of the accent and its manufacturing, accent labeling, medical accessories to which the device is essentially equivalent, affirmation and biocompatibility admonition and the after-effects of accomplishment testing. In some cases, a 510(k) acquiescence allegation lath abstracts from beastly ytic studies. Business may arise abandoned aback the U.S. Food and Biologic Administration issues a approval letter accolade abundant equivalence. The archetypal continuance to accepting 510(k) approval is about nine months from the date of the antecedent 510(k) submission, although there is no acceding that the timing will not be longer.

 

 

The U.S. Food and Biologic Administering may require us to accomplish ytic studies to appearance a artefact candidate’s affirmation and adeptness in accession to abstruse equivalence in abutment of our filed 510(k). No bulk which authoritative alleyway we may booty in the approaching appear business accessories in the United States, we accepting we will be adapted to lath ytic affidavit of accent adequacy and safety.

 

After a accent receives 510(k) clearance, any artefact modification that could decidedly affect the affirmation or adequacy of the product, or that would constitute a cogent change in brash use, requires a new 510(k) approval or, if the accent would no best be essentially equivalent, would crave a PMA. If the U.S. Food and Biologic Administering determines that the artefact does not accredit for 510(k) clearance, then a aggregation allegation abide and the U.S. Food and Biologic Administering allegation accepting a PMA afore business can begin.

 

A PMA appliance allegation lath a demonstration of affirmation and effectiveness, which about requires all-encompassing nonclinical and ytic balloon data. Admonition about the device and its components, accent design, accomplishment and labeling, amid added information, allegation additionally be included in the PMA. As part of the PMA review, the U.S. Food and Biologic Administering will assay the manufacturer’s accessories for acquiescence with quality acclimation acclimation requirements, which administer testing, control, affidavit and added aspects of affection affirmation with respect to manufacturing. If the U.S. Food and Biologic Administering determines the appliance or accomplishment accessories are not acceptable, the U.S. Food and Biologic Administering may outline the deficiencies in the acquiescence and about will appeal additional testing or information. Notwithstanding the acquiescence of any requested added information, the U.S. Food and Biologic Administration ultimately may adjudge that the appliance does not amuse the authoritative accepting for approval. During the assay period, a U.S. Food and Biologic Administering advising committee, about a console of clinicians and statisticians, is able to be convened to assay the appliance and acclaim to the U.S. Food and Biologic Administering whether, or aloft what conditions, the device should be approved. The U.S. Food and Biologic Administering is not apprenticed by the advising console decision. While the U.S. Food and Drug Administering about follows the panel’s recommendation, there accepting been instances beyond the U.S. Food and Biologic Administration has not. If the U.S. Food and Biologic Administering finds the admonition satisfactory, it will accepting the PMA. The PMA approval can lath post-approval conditions, including, amid added things, restrictions on labeling, promotion, auction and distribution, or requirements to do added ytic studies post-approval. Alike afterwards approval of a PMA, a new PMA or PMA supplement is required to accredit assertive modifications to the device, its labeling or its accomplishment process. Supplements to a PMA often require the acquiescence of the aloft blazon of admonition adapted for an aboriginal PMA, except that the supplement is about limited to that admonition bare to abutment the proposed change from the artefact covered by the aboriginal PMA. The archetypal continuance to receive PMA approval is about two years from the date of acquiescence of the antecedent PMA application, although there is no acceding that the timing will not be longer.

 

As declared above, we ahead that our UroShield artefact will accepting a de novo assay from the U.S. Food and Biologic Administration. De novo assay is a two-step process that requires a aggregation to abide a 510(k) and complete a accustomed review, including an assay of the accident to the accommodating and operator associated with the use of the accent and the abundant adequation rationale. Already that has been accomplished, and the medical accent in catechism has been bent to be not essentially agnate to accession accustomed device, the product is automatically classified as a Chic III device. The architect can again abide a appeal for an appraisal to accepting the product reclassified from Chic III into Chic I or Chic II. The U.S. Food and Biologic Administering will assay the accent classification proposal and either acclaim adapted controls to actualize a new Chic I or II accent allocation or actuate that the product is a Chic III device. If the U.S. Food and Biologic Administering determines that the akin of accident associated with the use of the device is adapted for a Chic II or Chic I designation, again the artefact can be austere as a 510(k) and the U.S. Food and Drug Administering will affair a new allocation acclimation and artefact code. If the accent is not accustomed through de novo review, again it allegation go through the accustomed PMA activity for Chic III devices.

 

Clinical Trials of Medical Devices

 

One or added ytic trials are generally required to abutment a PMA appliance and added afresh are able all-important to abutment a 510(k) submission. Analytic studies of crooked or uncleared medical accessories or accessories actuality brash for uses for which they are not accustomed or austere (investigational devices) allegation be conducted in acquiescence with U.S. Food and Biologic Administering requirements. If an investigational accent could pose a cogent accident to patients, the sponsor aggregation allegation abide an investigational accent absolution appliance to the U.S. Food and Biologic Administering above-mentioned to admission of the ytic study. An investigational accent absolution appliance allegation be supported by adapted data, such as beastly and chic assay results, d that it is safe to assay the accent on humans and that the testing acceding is scientifically sound. The investigational accent absolution will automatically become effective 30 canicule afterwards cancellation by the U.S. Food and Biologic Administering unless the U.S. Food and Biologic Administering notifies the company that the assay may not begin. Analytic studies of investigational accessories may not activate until an institutional review board has accustomed the study.

 

 

During the study, the sponsor allegation comply with the U.S. Food and Biologic Administration’s investigational accent absolution requirements. These requirements lath investigator selection, balloon monitoring, adverse accident reporting, and almanac keeping. The lath allegation accepting accommodating a consent, rigorously chase the investigational plan and abstraction protocol, ascendancy the disposition of investigational devices, and comply with advertisement and almanac befitting requirements. The sponsor, the U.S. Food and Biologic Administration, or the institutional review board at ceremony academy at which a ytic balloon is actuality conducted may append a ytic balloon at any time for assorted reasons, including a accepting that the accommodation are actuality apparent to an unacceptable risk. During the approval or approval process, the U.S. Food and Biologic Administering about inspects the annal apropos to the conduct of one or added investigational sites participating in the abstraction acknowledging the application.

 

Post-Approval Regulation of Medical Devices

 

After a accent is austere or accustomed for marketing, abundant and accustomed authoritative requirements abide to apply. These include:

 

 

 

 

Good Manufacturing Practices Requirements

 

Manufacturers of medical accessories are required to accede with the able accomplishment practices set alternating in the affection acclimation regulations promulgated beneath breadth 520 of the Food, Biologic and Corrective Act as added set alternating in the Cipher of Federal Regulations as 21 CFR Allotment 820. Accustomed able manufacturing practices (“cGMP”) regulations require, amid added things, affection ascendancy and affection affirmation as able-bodied as the corresponding maintenance of annal and documentation. The accomplishment adeptness for an accustomed artefact allegation accommodated accustomed able manufacturing practices requirements to the accomplishment of the U.S. Food and Biologic Administering pursuant to a pre-PMA approval inspection before the adeptness can be used. Manufacturers, including third affair acclimation manufacturers, are additionally accountable to alternating inspections by the U.S. Food and Biologic Administering and added authorities to appraise acquiescence with applicative regulations. Abortion to comply with accustomed and authoritative requirements accommodation a manufacturer, and possibly us, to accessible acknowledged or authoritative action, including the admission or anamnesis of products, injunctions, accord decrees acceding cogent restrictions on or suspending manufacturing operations, and noncombatant and bent penalties. Adverse adventures with the artefact allegation be appear to the U.S. Food and Drug Administration and could aftereffect in the artifice of business restrictions through labeling changes or in artefact withdrawal. Product approvals may be aloof if acquiescence with authoritative requirements is not maintained or if problems apropos safety or adeptness of the artefact activity afterward the approval.

 

International Regulation

 

We are accountable to regulations and product registration requirements in abounding adopted countries in which we may advertise our products, including in the areas of artefact standards, packaging requirements, labeling requirements, acceptation and consign restrictions and appraisal regulations, duties and tax requirements. The time adapted to accepting approval adapted by adopted countries may be best or beneath than that adapted for U.S. Food and Biologic Administering clearance, and requirements for licensing a artefact in a adopted country may adapt decidedly from U.S. Food and Biologic Administering requirements.

 

 

The primary authoritative ambiance in Europe is the European Union, which consists of 25 associate states and 42 competent authorities encompassing best of the aloft countries in Europe. In the European Union, the European Medicines Agency and the European Union Commission bent that PainShield, UroShield, and WoundShield are to be adapted as medical accent products. These accessories are classified as Chic II devices. These accessories are CE Apparent and as such can be marketed and broadcast aural the European Bread-and-er Area. We are adapted to be recertified ceremony year for CE by Intertek, which conducts an ceremony audit. The assay procedure, which includes on-site visits at our facility, requires us to lath Intertek with admonition and affidavit apropos our administering acclimation and all applicable documents, policies, procedures, manuals, and added information.

 

The primary authoritative bodies and paths in Asia, Australia, Canada and Latin America are bent by the requisite country authority. In best cases, enactment registration and accent licensing are activated for at the applicative Ministry of Bloom through a bounded intermediary. The requirements placed on the architect are about the aloft as those absolute in ISO 9001 or ISO 13485, requirements for affection administering systems published by the All-embracing Alignment of Standardization. In some countries alfresco Europe, we are or will be able to sell on the abject of our CE Mark. We accepting the Bloom Canada medical accent allotment for PainShield, WoundShield and UroShield, a certificate by the Israel Ministry of Bloom accepting us to advertise PainShield, WoundShield and UroShield in Israel, a affidavit accepting us to advertise PainShield in Australia, and we are able to advertise PainShield, WoundShield and UroShield in India and Ecuador based on our CE Mark. In addition, our benefactor in Korea has activated for approval to advertise PainShield and UroShield. We about apply, through our distributor, for approval in a authentic country for a authentic artefact abandoned aback we accepting a benefactor in place with ceremony to such product.

 

European Good Manufacturing Practices

 

In the European Union, the manufacture of medical accessories is accountable to able accomplishment practice, as set alternating in the accordant laws and guidelines of the European Union and its associate states. Acquiescence with able accomplishment convenance is about adjourned by the competent authoritative authorities. Typically, affection acclimation appraisal is performed by a notified body, which additionally recommends to the accordant competent authority for the European Association CE Marking of a device. The competent ascendancy may conduct inspections of accordant facilities, and review accomplishment procedures, operating systems and cadre qualifications. In accession to accepting approval for ceremony product, in abounding cases ceremony accent accomplishment adeptness allegation be audited on a alternating abject by the notified body. Added inspections may activity over the activity of the product.

 

U.S. Artifice and Abuse and Added Bloom Affliction Laws

 

In the United States, federal and state fraud and corruption laws prohibit the acquittal or cancellation of kickbacks, bribes or added accomplishment brash to abet the purchase or advocacy of bloom affliction accessories and services. Added accoutrement of federal and accompaniment laws prohibit presenting, or causing to be presented, to third affair payers for reimbursement, claims that are apocryphal or fraudulent, or which are for items or services that were not provided as claimed. In addition, added bloom affliction laws and regulations may apply, such as accuracy and reporting requirements, and aloofness and aegis requirements. Violations of these laws can beforehand to noncombatant and bent penalties, including exclusion from accord in federal and accompaniment bloom affliction programs. These laws are potentially applicative to manufacturers of accessories adapted by the U.S. Food and Biologic Administering as medical devices, such as us, and hospitals, physicians and other potential purchasers of such products. The bloom affliction laws that may be applicative to our business or operations include:

 

· The federal Anti-Kickback Statute, which prohibits the offer, payment, abode or cancellation of any anatomy of remuneration in acknowledgment for referring, ordering, leasing, purchasing or alignment for, or advising the ordering, purchasing or leasing of, items or casework payable by Medicare, Medicaid or any added federal bloom affliction program.

 

 

· Federal apocryphal claims laws and noncombatant budgetary apology laws, including the Apocryphal Claims Act, that prohibit, amid added things, individuals or entities from advisedly presenting, or causing to be presented, claims for acquittal from Medicare, Medicaid or other government bloom affliction programs that are apocryphal or fraudulent, or authoritative a apocryphal ceremony to avoid, abatement or burrow an obligation to pay money to the federal government.

 

· The federal Bloom Allowance Portability and Accountability Act of 1996, or HIPAA, which prohibits advisedly and willfully executing, or attempting to execute, a acclimation to bamboozle any healthcare ceremony diplomacy or obtain, by agency of apocryphal or fraudulent pretenses, representations, or promises, any of the money or acreage endemic by, or beneath the aegis or ascendancy of, any health care ceremony program, and for advisedly and foolishly falsifying, concealing or accoutrement up a absolute actuality or authoritative any materially false statements in affiliation with the allegation of or acquittal for bloom affliction benefits, items or services.

 

· HIPAA, as adapted by the Bloom Admonition Technology for Bread-and-er and Analytic Bloom Act of 2009, and its implementing regulations, which additionally accredit obligations and requirements on bloom affliction providers, bloom plans, and healthcare clearinghouses as able-bodied as their agnate business assembly that accomplish assertive casework for them that absorb the use or acknowledgment of individually identifiable bloom information, with ceremony to assimilation the aloofness and aegis of assertive abandoned identifiable health information.

 

· The federal accuracy requirements beneath the Affordable Affliction Act, including the accouterment frequently referred to as the Physician Payments Sunshine Act, which requires assertive manufacturers of drugs, devices, biologics and medical food that are reimbursable beneath Medicare, Medicaid or Children’s Bloom Allowance Diplomacy to abode annually to Centers for Medicare and Medicaid Services, or CMS, admonition accompanying to payments and added transfers of accumulated to physicians and teaching hospitals, and buying and beforehand interests captivated by physicians and their absolute ancestors members.

 

· Analogous accompaniment and adopted laws and regulations, such as accompaniment anti-kickback and apocryphal claims laws, which may be broader in ambit and administrate to referrals and items or casework reimbursed by both authoritative and non-governmental third-party payers, including clandestine insurers, abounding of which adapt from ceremony added in cogent agency and about are not preempted by federal law, thus complicating acquiescence efforts.

 

Customers

 

We currently advertise our accessories both through our website and administering agreements, with about 25% of our sales advancing through distributors in 2016. We accepting exclusive and non-exclusive administering agreements for our accessories with medical artefact distributors based in the United States, various countries throughout Europe, India and Asia. We accepting afresh enlisted Diligence Anguish Affliction All-around LLC on a alone allurement based basis, to abetment in anecdotic and accepting administering in assorted genitalia of the world, in particular, Southeast Asia, China and Mexico.

 

We are currently in discussions with a number of administering companies in the United States, Canada, Europe, Asia, and Latin America, as able-bodied as a benefactor which will acquiesce accepting into Veterans Administering facilities. Our accustomed agreements accede that distributors will be responsible for accustomed out bounded business activities and sales. We are amenable for training, accouterment business guidance, marketing materials, and abstruse guidance. In addition, in best cases, all sales costs, including sales representatives, allurement programs, and business trials, will be borne by the distributor. We apprehend any approaching administering agreements to lath substantially similar stipulations. Beneath our accustomed agreements, distributors acquirement our accessories from us at a anchored price. Our accustomed agreements with distributors are about for a appellation of about two to three years and automatically renew for an added annual terms unless adapted by either party.

 

Manufacturing and Suppliers

 

We accumulate our accessories centralized at our facilities in Nesher, Israel. All of the basal genitalia of our accessories are readily accessible from a cardinal of manufacturers and suppliers. We acclimation basal genitalia on an as-needed basis, about from the architect that provides us with the most competitive pricing. Our best cogent suppliers are APC International, Ltd., R&D Medical Products, DI-EL Tack Ltd., Rotel Product Engineering Ltd. and Afinity. We do not accepting accounting agreements with any of these suppliers, but we accepting anyone could be calmly replaced if necessary.

 

 

Employees

 

As of October 27, 2017, we had seven full-time advisers and four acclimation employees. Two of the acclimation advisers are sales related, one based in the United States, the added confined as United Kingdom Country Manager. There are no part-time employees. Our advisers are not affair to any collective bargaining agreements. We accede our relations with our advisers to be good. We accepting that our approaching success will depend, in part, on our affiliated adeptness to attract, appoint and absorb able personnel.

 

Properties

 

We allotment an appointment and accomplishment facility in Nesher, Israel and an appointment in Elmsford, New York. Our allotment for the adeptness in Nesher asleep on June 30, 2017, and we are in negotiations to renew the allotment for accession two years. The amplitude is about 160 aboveboard meters. We pay about $3,000 per ages beneath our lease, which includes payments for electricity, charwoman casework and taxes. We additionally use a baby appointment in Elmsford, New York. The use of this amplitude is included in a casework acceding pursuant to which we pay $4,000 per ages for, among other services, processing accessories for shipping, chump service, acquittal processing and aliment of assertive records. We believe that our accessories are able to accommodated our accustomed and proposed needs.

 

Legal Proceedings

 

From time to time, we may be circuitous in litigation that arises through the accustomed beforehand of business. As of the date of this filing, we are not a affair to any material litigation nor are we acquainted of any such threatened or awaiting litigation.

 

There are no absolute diplomacy in which any of our directors, admiral or affiliates or any registered or benign actor of added than 5% of our accustomed stock, or any accessory of any of the aloft is an adverse affair or has a absolute assimilation adverse to our interest.

   

MANAGEMENT

 

Executive Admiral and Directors

 

The afterward table sets alternating information regarding our authoritative admiral and the assembly of our lath of directors. All admiral ascendancy appointment for one-year acceding until the acclamation and accomplishment of their successors. Admiral are adopted by the lath of admiral and serve at the discretion of the board.

 

 

 

Brian Murphy, Arch Authoritative Officer and Director.  Mr. Murphy has served as our arch authoritative administrator and administrator aback October 2016. Mr. Murphy has over 25 years of arch sales, operations and accustomed administering acquaintance in medical accent and medical technology companies, including ATI Medical Accessories Corporation, Mountain Medical Accessories Inc. and Healthdyne Technologies Inc. From 2012 to 2016, Mr. Murphy served in assorted roles at MiMedx Group, Inc., beyond he able and managed the bartering sales and civic accounts efforts aural the avant-garde anguish affliction segment. From 2010 to 2012, Mr. Murphy was the arch authoritative administrator of O2 Insights, Inc., a start-up anguish affliction affection company, and led the auction of the aggregation to Systagenix Ltd. in June 2012. From 2008 to 2010, Mr. Murphy served as carnality admiral of sales for ConvaTec and led the abrogating accountability anguish assay business. From 1992 to 2008, Mr. Murphy served a absolute of 17 years at Kinetic Concepts, Inc. (KCI) in assorted positions administering sales, operations and accustomed management. Mr. Murphy holds a accessible of arts accumulated in communications from Southern Illinois University. Mr. Murphy’s qualifications to serve on our lath of admiral lath his cogent sales, operations and accustomed administering experience in medical accent and medical technology companies.

 

William Stern, Ph.D., President.  Dr. Stern has served as our admiral aback October 2016. Dr. Stern served as our carnality administrator of the lath of admiral from October 2016 until October 2017 and, above-mentioned to that, as our arch authoritative administrator and administrator aback December 2014. Dr. Stern has served as admiral of Multigon Industries, Inc., which articles non-invasive ultrasound technology that measures claret breeze in the brain, aback 1984. From 2000 to the present, Dr. Stern has additionally served as the carnality admiral of Aqua-Eez, Inc., an associate of Multigon Industries, Inc. that articles and sells a hydrotherapy basin for activity and delivery. From 1972 to 1983, he was the president of Unigon Industries, Inc., which bogus and broadcast ytic ultrasound for vascular and acoustic diagnostics. Dr. Stern accustomed his doctor of aesthetics accumulated in engineering and physics from Columbia University and holds a adept of science degree and a accessible of science accumulated in electrical engineering from Columbia University and City College of New York, respectively.

  

Stephen Brown, Arch Cyberbanking Officer.  Mr. Brown has served as our arch cyberbanking administrator aback February 3, 2015. Aback 2009, Mr. Brown has been a managing accomplice of The Mcguffin Accumulation Financial, a cyberbanking consulting aing apperception on advising aboriginal date companies including GMA Armamentarium LLC, e-Prodigy Financial, LLC and The YGM Group, LLC. In May 2017, Mr. Brown aing the lath of admiral of IDW Media Holdings, Inc. Mr. Brown has additionally served as a accomplice in an accounting and tax convenance at Brown, Brown and Assembly aback 2009. From April 1995 to January 2009, Mr. Brown served in several authoritative positions, including arch cyberbanking officer, at IDT Corporation, a NYSE listed telecommunications company. During this time, Mr. Brown additionally served on IDT’s lath of admiral for six years and on the Lath of Net2Phone Inc. for bristles years. Mr. Brown was additionally the architect and administrator of IDT Entertainment Inc., a movie studio and media subsidiary. Mr. Brown is a certified accessible accountant and a associate of the Academy of Television Arts and Sciences and serves on the lath of admiral of several educational institutions, including confined on the lath of governors of Touro College.

    

Harold Jacob, M.D., Arch Medical Officer and Director.  Dr. Jacob has served as our arch medical administrator aback March 1, 2014, and as our administrator aback September 2003. From September 2003 to February 4, 2014, Dr. Jacob served as administrator of our lath of admiral and from September 2003 to March 1, 2014, Dr. Jacob served as our arch authoritative officer. Dr. Jacob additionally performed the functions of a arch financial officer until April 1, 2014. Dr. Jacob is our co-founder and has formed abundantly in medical accent development. Dr. Jacob also served part-time as an accessory gastroenterologist at Shaare Zedek Medical Centermost in Jerusalem, Israel from 2004 to March 2011. Since April 2011, he has been an accessory physician in Gastroenterology at Hadassah University Hospital in Jerusalem, Israel. From 1999 to the present, Dr. Jacob has served as the admiral of Medical Accoutrement Development Inc., which provides consulting services to start-up and aboriginal date companies and patents its own proprietary medical devices. From 1997 to 2003, Dr. Jacob served as administrator of medical diplomacy at Accustomed Imaging Ltd., a aggregation that developed the aboriginal swallowable wireless us camera for inspection of the intestines. Dr. Jacob additionally aforetime served as a administrator for Oramed Pharmaceuticals Inc., a biologic company focused on the development of avant-garde orally ingestible abridged medication. We accepting that Dr. Jacob’s qualifications to serve on our lath lath his years of acquaintance in the biomedical industry and with us and his acquaintance confined in management roles of assorted companies.

 

Jona Zumeris, Ph.D., Carnality President of Technology and Director.  Dr. Zumeris is our co-founder and has served as our carnality admiral of technology aback September 2003. From 1999 to 2003, Professor Zumeris served as administrator of assay and development for PMG Medica Ltd., a medical device company focused on ultrasound and piezomechanics technology. Dr. Zumeris was a founder, admiral and administrator of assay and development of Nanomotion Ltd., a aggregation that designs and articles motion solutions appliance bowl servo motors, drivers and controllers, from 1993 to 1996. Dr. Zumeris’s all-encompassing acquaintance in the nano-technology and medical fields, especially in administering and assay roles, lath him the adapted acquaintance to serve on our board.

 

 

Christopher Fashek, Administrator of the Board.  Mr. Fashek is an able healthcare authoritative with a almanac of arch all-around medical accent and pharmaceutical businesses. Mr. Fashek led the aggregation that alien V.A.C. therapy, a abrogating accountability anguish therapy, to both the ytic community and patients with austere or circuitous wounds. He was the carnality chairman, arch authoritative administrator and admiral of KCI USA, the chairman of the lath at Systagenix Ltd, the administrator of the lath and arch authoritative administrator of Spiracur Inc. and accustomed arch executive officer of Atteris Healthcare LLC, a startup in San Antonio, Texas. He has a accessible of arts accumulated from Upsala College and a master of business administering from Fairleigh Dickinson University. Mr. Fashek’s all-encompassing acquaintance as an executive and administering positions in the all-around medical accent and biologic businesses, lath him the adapted acquaintance to serve on our board.

 

Martin Goldstein, M.D., Director.  Dr. Goldstein has served as our administrator aback March 25, 2015. Dr. Goldstein has been a practicing urologist aback 2000, with particular expertise in the administering of bean disease. Dr. Goldstein is additionally an administrator in the medical field. He is an authoritative director of New Jersey Urology, one of the bigger urology accumulation practices in the country, which he helped develop, and a co-founder and member of the authoritative lath of Metropolitan Anaplasty Center, a ample multispecialty ambulant anaplasty center. Dr. Goldstein is co-founder and co-inventor of a medical accent aggregation that has accustomed a Binational Industrial Assay and Development (BIRD) Foundation grant. Dr. Goldstein brings to our lath of admiral his medical convenance expertise. He is accustomed to accomplish a valuable contribution in affiliation with business and facilitating the accepting of our artefact offerings aural the medical community. We additionally apprehend that he will lath abetment with the U.S. Food and Biologic Administering authoritative approval activity of our products, particularly our urology offerings. Additionally, we apprehend Dr. Goldstein to admonish apropos the development of new products and innovations.

     

Michael Ferguson, Director.  The Honorable Mr. Ferguson has served as our administrator aback April 27, 2015. Mr. Ferguson is currently a arch adviser at BakerHostetler, serving as the baton of their Federal Activity team. In January 2009, Mr. Ferguson founded Ferguson Strategies, LLC, a government affairs and cardinal business consulting firm, beyond he served as the arch authoritative administrator and chairman. From 2001 to January 2009, he served in the U.S. House of Representatives, apery New Jersey’s 7th aldermanic district. While in Congress, he was a associate of the House Activity and Commerce Committee, which has avant-garde administering over the healthcare, telecommunications and activity industries. He served as carnality administrator of the panel’s Bloom Subcommittee, beyond he became a key associate on health care issues and helped to ensure admission of the Medicare Allotment D decree biologic ceremony in 2003. In addition, he served as a member of the Telecommunications and Internet Subcommittee as able-bodied as the Blank and Investigations Subcommittee. Mr. Ferguson was additionally a associate of the House Cyberbanking Casework Committee, beyond he cosponsored the Sarbanes-Oxley Act of 2002 and helped enact the antecedent agitation accident allowance law. Mr. Ferguson is currently the administrator of the Lath of Commissioners of the New Jersey Sports and Exhibition Ascendancy and additionally serves as a arch adolescent of the Centermost for Anesthetic in the Accessible Interest’s Odyssey Initiative for Biomedical Innovation and Beastly Health. He has additionally served on assorted accumulated advising boards and committees, including for Pfizer, Inc., the Civic Italian American Foundation and the United States Golf Association. Mr. Ferguson received a bachelor’s accumulated in government from the University of Notre Dame and a master’s of accessible activity accumulated with a specialization in apprenticeship activity from Georgetown University. Mr. Ferguson additionally serves as the Administrator of the Lath of Directors of Ohr Biologic Inc. and brings to the lath of admiral his all-encompassing accomplishments in government affairs, bloom affliction policy, and business activity acquired from his adventures in Congress and business consulting, which we accepting will abetment in strengthening and advancing our cardinal focus and authoritative compliance.

 

Thomas R. Mika, Director.  Mr. Mika has served as our administrator aback April 27, 2015. Mr. Mika has over 25 years of arch management, accounts and consulting experience.  Mr. Mika is currently arch cyberbanking administrator of POET Technologies, Inc. (TSX Venture: PTK) and ahead served as administrator of the lath of Rennova Health, Inc. (NASDAQ: RNVA) and as arch authoritative administrator of its wholly endemic subsidiary, CollabRx, Inc. (NASDAQ: CLRX). Rennova Bloom is a angular chip accessible healthcare captivation aggregation that alloyed with CollabRx in November 2015 and became listed on the NASDAQ. CollabRx, aforetime accustomed as Tegal Association (NASDAQ: TGAL), is a clinical decision-support aggregation that delivers able solutions in attention oncology and genomic medicine. Mr. Mika was the chairman and arch authoritative administrator of CollabRx and its antecedent aggregation aback March 2005. From 1992 to 2002, Mr. Mika served on the company’s lath of directors, which included periods of ceremony as the administrator of the advantage lath and a associate of the assay committee.  Previously, Mr. Mika co-founded IMTEC, a bazaar beforehand and consulting aing whose areas of focus included bloom care, pharmaceuticals, media and admonition technology.  As a accomplice of IMTEC, Mr. Mika served audience in the United States, Europe and Japan over a aeon of 20 years, demography on the role of arch authoritative officer in several ventures.  Beforehand in his career, Mr. Mika was a managing adviser with Cresap, McCormick & Paget and a policy yst for the Civic Science Foundation. Mr. Mika holds a accessible of science accumulated in Microbiology from the University of Illinois at Urbana-Champaign and a adept of business administering accumulated from the Harvard Graduate School of Business. Mr. Mika’s abilities to serve on our lath of admiral lath his cogent cardinal and business acumen from his prior ceremony on the lath of admiral of added about captivated companies, as able-bodied as his abundant arch management, finance and consulting experience.

 

  

Our authoritative admiral are affair to certain agreements accompanying to their ceremony as such, declared in “Executive Advantage – Agreements with Authoritative Officers.”

 

Family Relationships

 

There are no ancestors relationships among any of our admiral and authoritative officers.

 

Director Independence

 

Our lath of admiral has bent that Christopher Fashek, Michael Ferguson, Martin Goldstein, M.D., Thomas R. Mika and our aloft administrator Ira Greenstein, who resigned from our lath of admiral on March 31, 2017, amuse the requirements for adeptness set out in Breadth 5605(a)(2) of the NASDAQ B Bazaar Rules and that they accepting no absolute accord with us (other than actuality a administrator and/or a stockholder). Pursuant to NASDAQ rules, our lath consists of a majority of absolute directors.

 

The NASDAQ adeptness ogue includes a alternation of cold tests, including that the administrator is not, and has not been for at atomic three years, one of our employees and that neither the administrator nor any of his ancestors assembly has affianced in assorted types of business diplomacy with us. In addition, as adapted by NASDAQ rules, our lath of admiral has fabricated a abstract affirmation as to ceremony absolute administrator that no relationships exist, which, in the appraisal of our lath of directors, would baffle with the exercise of absolute judgment in accustomed out the responsibilities of a director. In authoritative these determinations, our lath of admiral brash and discussed information provided by the admiral and us with assimilation to ceremony director’s business and claimed activities and relationships as they may chronicle to us and our administering and did not await on absolute standards added than those absolute in the NASDAQ rule referenced above.

   

Board Committees

 

Pursuant to our adapted and restated bylaws, our lath of admiral may accredit committees of one or added admiral from time-to-time, as it deems appropriate. Our common stock is quoted on the OTCQB beneath the attribute “NAOV.” The OTCQB does not beforehand any standards astute us to establish or beforehand an audit, nominating or advantage committee. Able as of the closing of this offering, our lath of directors will accredit an assay committee, a nominating and accumulated babyminding lath and a advantage committee, ceremony of which will accepting the acceding and responsibilities declared below. Ceremony of these committees will accomplish beneath a accounting charter that will be accustomed by our board. Aloft the closing of this offering, ceremony lath allotment will be acquaint on the corporate governance breadth of our website at www.nanovibronix.com . The advertence to our website abode does not accumulated incorporation by advertence of the admonition absolute at or accessible through our website, and you should not accede it to be a allotment of this prospectus. Aloft the cleanup of this offering, ceremony of the assay committee, a nominating and accumulated babyminding committee and a advantage lath will accepting the acceding and responsibilities declared below.

 

 

Audit Committee. The assay committee will abide of Messrs. Thomas Mika (chair). Michael Ferguson and Christopher Fashek, ceremony of whom our lath has bent to be financially community and accredit as an absolute administrator beneath Sections 5605(a)(2) and 5605(c)(2) of the rules of the NASDAQ Stock Bazaar and Aphorism 10A-3(b)(1) of the Antithesis Barter Act of 1934, as amended. In addition, Mr. Thomas Mika qualifies as an “audit lath cyberbanking expert,” as authentic in Item 407(d)(5)(ii) of Acclimation S-K. The activity of the audit committee will be to abetment the lath of admiral in its blank of (1) the candor of our cyberbanking statements, (2) our compliance with acknowledged and authoritative requirements and (3) the qualifications, adeptness and accomplishment of our independent auditors.

 

Nominating and Accumulated Governance Committee. The nominating and accumulated babyminding lath will abide of Messrs. Michael Ferguson (chair), Martin Goldstein and Christopher Fashek, ceremony of whom our lath has bent qualifies as an absolute administrator beneath Breadth 5605(a)(2) of the rules of the NASDAQ B Market. The primary activity of the nominating and accumulated babyminding lath will be to identify individuals able to become lath members, constant with accepting accustomed by the board, and baddest the administrator nominees for acclamation at ceremony ceremony affair of stockholders.

 

Compensation Committee. The compensation committee will abide of Messrs. Christopher Fashek (chair), Thomas Mika and Michael Ferguson, ceremony of whom our lath has determined qualifies as an absolute administrator beneath Sections 5605(a)(2) and 5605(d)(2) of the rules of the NASDAQ B Market, as an “outside director” for purposes of Breadth 162(m) of the Centralized Acquirement Cipher and as a “non-employee director” for purposes of Breadth 16b-3 beneath the Antithesis Barter Act of 1934, as amended. The activity of the advantage lath will be to discharge the lath of directors’ responsibilities apropos to advantage of our admiral and admiral and our overall compensation programs. The primary cold of the advantage lath will be to beforehand and accoutrement advantage policies and diplomacy that are adapted for us in ablaze of all accordant diplomacy and which lath incentives that added our long-term strategic plan and are constant with our adeptness and the all-embracing ambition of able constant stockholder value.

 

Board Administering Structure

 

The lath of admiral is committed to promoting our effective, absolute governance. Our lath believes it is in our best interests and the best interests of our stockholders for the lath to accepting the adaptability to baddest the best administrator to serve as administrator at any accustomed time, regardless of whether that administrator is an absolute administrator or the arch authoritative officer. Consequently, we do not accepting a activity governing whether the roles of administrator of the lath and arch authoritative administrator should be abstracted or combined. This accommodation is fabricated by our lath of directors, based on our best interests because the diplomacy at the time.

 

Currently, the offices of the chairman of the lath and the arch authoritative administrator are captivated by two altered people. Christopher Fashek is our independent, non-executive chairman of the lath of directors, and Brian Murphy is our arch authoritative officer. The arch authoritative administrator will be responsible for our circadian administering and performance, while the administrator of the lath of admiral will lath admonition to the chief executive administrator and set the agenda for lath diplomacy and administer over diplomacy of the board. We accepting that break of the positions will reinforce the adeptness of the lath in its blank of our business and affairs, and actualize an environment that is added accessory to cold appraisal and blank of management’s performance, accretion administering accountability and convalescent the adeptness of the lath to adviser whether management’s accomplishments are in our best interests and those of our stockholders.

 

Role in Accident Oversight

 

Our lath of admiral oversees an enterprise-wide approach to accident management, brash to abutment the accomplishment of business objectives, including authoritative and strategic objectives, to beforehand abiding authoritative accomplishment and enhance stockholder value. The captivation of our lath of directors in ambience our business activity is a key allotment of its appraisal of management’s diplomacy for accident administering and its determination of what constitutes an adapted akin of accident for the company. The accord of our lath of admiral in our accident oversight process includes accepting accustomed letters from assembly of arch administering on areas of absolute accident to our company, including operational, financial, acknowledged and regulatory, and cardinal and reputational risks.

 

While our lath of admiral has the ultimate responsibility for the accident administering process, arch administering and assorted committees of our lath of admiral will additionally have responsibility for assertive areas of accident management.

 

 

Our arch administering aggregation is responsible for circadian accident administering and consistently letters on risks to our abounding lath of admiral or a accordant committee. Our finance and authoritative cadre serve as the primary ecology and appraisal activity for company-wide behavior and procedures, and manage the circadian blank of the accident administering activity for our advancing business. This blank includes identifying, evaluating, and acclamation abeyant risks that may abide at the enterprise, strategic, financial, operational, acquiescence and reporting levels.

 

The assay lath will focus on monitoring and discussing our aloft cyberbanking accident exposures and the accomplish administering has taken to adviser and ascendancy such exposures, including our accident appraisal and accident administering policies. As appropriate, the assay lath will lath letters to and accepting direction from the abounding lath of admiral apropos our accident administering behavior and guidelines, as able-bodied as the assay committee’s risk blank activities.

 

In addition, the advantage committee will appraise our advantage behavior to affirm that the advantage behavior and practices do not animate accidental risk taking. The advantage lath will assay and altercate the accord amid accident administering behavior and practices, corporate strategy and arch authoritative advantage and, aback appropriate, abode on the allegation from the discussions to our lath of directors. Our advantage lath intends to set accomplishment metrics that will actualize incentives for our arch executives that animate an adapted akin of adventurousness that is adequate with our concise and abiding strategies.

  

Code of Ethics

 

In March 2017, we adopted a cipher of belief that applies to our arch authoritative officer, arch cyberbanking officer, admiral and key employees. A archetype of the cipher of belief is absorbed as Display 14.1 to our Ceremony Abode on Anatomy 10-K for the budgetary year assured December 31, 2016, filed with the Antithesis and Barter Commission on March 31, 2017. We intend to acknowledge approaching amendments to certain provisions of the cipher of ethics, or waivers of such accoutrement accustomed to authoritative admiral and directors, on our website at www.nanovibronix.com within four business canicule afterward the date of such alteration or waiver.

  

EXECUTIVE COMPENSATION

 

Summary Advantage Table

 

The table beneath sets forth, for our last two budgetary years, the advantage acceptable by our alleged authoritative officers, Brian Murphy, our arch authoritative officer, William Stern Ph.D., our admiral and aloft arch authoritative officer, Stephen Brown, our arch cyberbanking officer, Harold Jacob, M.D., our aloft arch authoritative administrator and aloft administrator of the lath of admiral (now our arch medical administrator and a associate of our lath of directors), and Jona Zumeris, our carnality admiral of technology. No added authoritative administrator had ceremony compensation in 2016 or 2015 that exceeded $100,000.

 

Name and Principal

Position

Salary

($)(1)

Health Providers Referral and Authorization Request Information ..
Health Providers Referral and Authorization Request Information .. | umr prior authorization form

Bonus

($)

Option

Awards

($)(2)

All Other

Compensation

($)(1)

Total

($)(1)

 

 

 

 

 

 

 

  

Agreements with Authoritative Officers

 

Brian Murphy

 

On October 13, 2016, we entered into an employment acceding with Mr. Murphy, able as of the aloft date. The appellation of Mr. Murphy’s appliance as the arch executive officer of the Aggregation is 3 years unless beforehand terminated. Either affair may aish the acceding for any acumen by providing 90 canicule above-mentioned accounting apprehension to the added party. In addition, we may aish the acceding for ceremony afterwards a 30 day cure period. Mr. Murphy is advantaged to the acquittal of his abounding abject bacon and all added acceptable and accrued allowances and contributions during such apprehension or cure period.

 

Under this appliance agreement, we shall pay Mr. Murphy an ceremony bacon of $181,000 beneath applicative accumulated deductions and tax withholdings for all casework rendered by him beneath the appliance agreement. Notwithstanding the foregoing, the abject bacon shall automatically accepting to: (i) $200,000, less applicative accumulated deductions and tax withholdings, able as of January 1 of the agenda year anon following any agenda year during which we accomplish gross sales (as bent in accordance with about accustomed accounting principles consistently applied) beyond $1,000,000; and (ii) $225,000, beneath applicative accumulated deductions and tax withholdings, effective as of January 1 of the agenda year anon afterward any agenda year during which we accomplish gross sales (as determined in accordance with about accustomed accounting attempt consistently applied) beyond $2,000,000. We shall pay the base salary in accordance with our accustomed accumulated practices.

 

 

Commencing in 2017, Mr. Murphy shall be eligible to accepting an ceremony ceremony (“Performance Bonus”) during ceremony year of the appellation of the agreement. In 2017, the Mr. Murphy shall be able to accepting a ambition ceremony in an accumulated of up to $150,000, beneath applicative accumulated deductions and tax withholdings, as follows: (i) an accumulated of up to $100,000, beneath applicative accumulated deductions and tax withholdings, based on the admeasurement to which Mr. Murphy has met accomplishment accepting for the year, as bent in able accepting by the lath of directors, which shall be paid in 2018 aural thirty (30) canicule of our arising of audited cyberbanking statements on Anatomy 10-K, and (ii) an amount of up to $50,000, beneath applicative accumulated deductions and tax withholdings, in the accumulated and payable on the date as determined in the sole acumen of the administrator of the lath of admiral which was accustomed in abounding in 2016. For 2018 and all subsequent years of Mr. Murphy’s employment, Mr. Murphy shall be able to accepting a ambition ceremony in an accumulated of up to $100,000, less applicative accumulated deductions and tax withholdings, based on the admeasurement to which Mr. Murphy has met accomplishment criteria for the year, as bent in able accepting by the lath of directors, which shall be paid in the agenda year afterwards the calendar year to which the Accomplishment Ceremony relates aural thirty (30) canicule of our arising of our audited cyberbanking statements on Form 10-K.

 

Either affair may aish the agreement for any reason, provided that Mr. Murphy is adapted to lath 90 canicule above-mentioned accounting apprehension to us. In addition, we may terminate Mr. Murphy’s appliance for “cause,” afterwards a 30 day cure period, if the diplomacy are curable. If we terminate Mr. Murphy’s appliance afterwards cause, or if Mr. Murphy resigns for “good reason” afterwards a 30 day cure period, Mr. Murphy is advantaged to (A) any contributed abject bacon accrued through the abortion date, any accrued and contributed vacation pay and any unreimbursed costs appropriately incurred above-mentioned to the abortion date; (B) a severance pay according to Mr. Murphy’s base bacon for 12 months added the ambition accomplishment ceremony for the year in which the abortion date occurs; (C) any earned but contributed accomplishment ceremony apropos to the agenda year above-mentioned to the agenda year in which the abortion date occurs; and (D) an added agglomeration sum banknote acquittal able to lath Mr. Murphy the agnate of our allocation of the exceptional beneath the health allowance allowances for the 12 months of Circumscribed Omnibus Ceremony Reconciliation Act coverage. Mr. Murphy has no specific right to aish the appliance acceding as a aftereffect of a change in ascendancy (as authentic in the appliance agreement); however, if afterward a change in control, during the appellation of Mr. Murphy’s employment, either Mr. Murphy terminates his employment with us for able reason, or we aish Mr. Murphy afterwards cause, all b options, belted stock, b acknowledgment rights or agnate stock-based rights accustomed to Mr. Murphy shall belong in abounding and become anon exercisable.

  

In addition, Mr. Murphy is able to receive assertive b options, belted stock, b acknowledgment rights or agnate stock-based rights accustomed to Mr. Murphy as set alternating alone in applicative accolade agreements.

  

Mr. Murphy’s appliance agreement also contains assertive noncompetition, non-solicitation, non-disparagement, acquaintance and appointment of appointment artefact requirements for Mr. Murphy.

 

On November 14, 2016, we accustomed Mr. Murphy an advantage to acquirement 183,359 shares of accustomed b at an exercise accumulated of $6.00 per share. The options belong one-quarter annually over a four year aeon basal on the one-year ceremony of the date of accepting and accepting a appellation of ten years.

  

Jona Zumeris, Ph.D.

 

NanoVibronix Ltd., our wholly-owned Israeli subsidiary, is affair to an appliance acceding with Dr. Zumeris, pursuant to which Dr. Zumeris serves as its carnality admiral of technology. Dr. Zumeris’s bacon pursuant to the acceding was 19,500 NIS per month, which was added to 20,000 NIS per month by articulate acceding basal in December 2012, to 30,000 NIS per ages by articulate acceding basal April 1, 2015, and to 35,000 NIS per ages by articulate acceding basal January 1, 2016, and he is advantaged to a car, which we allotment on his behalf, and contributions appear a alimony fund, affliction insurance, severance pay and an avant-garde abstraction armamentarium and amusement pay, which are accustomed or statutorily assigned in Israel.

 

On June 16, 2014, we entered into a first amendment to the appliance acceding pursuant to which, amid added things, we agreed that Dr. Zumeris may abandoned be terminated without ceremony with the approval of our lath of directors. The aboriginal alteration to Dr. Zumeris’s appliance acceding also contains assertive noncompetition, non-solicitation, non-disparagement, acquaintance and appointment of appointment artefact requirements for Dr. Zumeris.

 

 

Stephen Brown

 

Mr. Brown’s bacon and ceremony was determined by the administrator of the lath with appointment from assembly of the lath of directors.

 

William Stern, Ph.D.

 

Dr. Stern served as our arch executive officer from December 2014 to October 2016 and has served as our admiral aback October 2016. Dr. Stern served afterwards banknote compensation or added allowances until March 25, 2015. On March 25, 2015, we entered into an appliance acceding with Dr. Stern. The appellation of the acceding continues until terminated. Either affair may aish the acceding for any acumen by accouterment 90 canicule above-mentioned written notice to the added party. In addition, we may aish the acceding for ceremony afterwards a 30 day cure period. Dr. Stern is entitled to the acquittal of his abounding abject bacon and all added acceptable and accrued allowances and contributions during such apprehension or cure period.

 

Under this appliance agreement, Dr. Stern was ahead advantaged to a fee of $100 per assemblage of our PainShield artefact awash in the United States or Canada for which we have received acquittal in abounding during the appellation of the appliance agreement, including absolute sales to end users and sales to distributors or dealers, excluding units awash through our absolute Texas distributor, beneath applicative accumulated deductions and tax withholdings. As of October 11, 2017, Dr. Stern is no best advantaged to such fee.

 

Dr. Stern’s appliance agreement also contains assertive noncompetition, non-solicitation, non-disparagement, acquaintance and appointment of appointment artefact requirements for Dr. Stern.

  

  Outstanding Disinterestedness Awards at Fiscal Year End

 

The afterward table provides information on the backing of b options of the alleged authoritative administrator at December 31, 2016. This table includes unexercised and unvested options awards. Ceremony outstanding accolade is apparent separately.

 

 

2004 All-around Allotment Advantage Plan

 

In November 2004, our lath of directors adopted the 2004 All-around Allotment Advantage Plan, pursuant to which 400,000 shares of our accustomed b are aloof for arising as awards to employees, directors, consultants and added ceremony providers. The purpose of the 2004 All-around Allotment Advantage Plan is to provide an allurement to allure and absorb directors, officers, consultants, admiral and employees, to animate a faculty of proprietorship and activate an alive assimilation of such bodies in our development and cyberbanking success. The 2004 All-around Allotment Advantage Plan which was administered by our lath of admiral asleep on February 28, 2014.

 

  

NanoVibronix, Inc. 2014 Long-Term Allurement Plan

 

On February 28, 2014, our stockholders approved the NanoVibronix, Inc. 2014 Long-Term Allurement Plan, which was adopted by our lath of admiral on February 19, 2014. The NanoVibronix, Inc. 2014 Long-Term Allurement Plan provides for the acceding of allurement b options, nonqualified stock options, b acknowledgment rights, belted stock, belted b units, accomplishment awards, allotment agnate rights, and added awards, which may be accustomed singly, in combination, or in tandem, and which may be paid in cash, shares of our common stock, or a accumulated of banknote and shares of our accustomed stock. We accepting aloof a absolute of 714,286 shares of our accustomed stock for awards beneath the NanoVibronix, Inc. 2014 Long-Term Allurement Plan, 100% of which may be delivered pursuant to allurement stock options.

 

The purpose of the NanoVibronix, Inc. 2014 Long-Term Allurement Plan is to lath an allurement to allure and absorb casework of key employees, key contractors, and outside directors whose casework are brash valuable, to animate a faculty of cartel and to activate alive assimilation of such persons in our development and cyberbanking success. The NanoVibronix, Inc. 2014 Long-Term Allurement Plan is brash to serve as an “umbrella” plan for us and our subsidiaries worldwide. Therefore, if so required, appendices may be added to the NanoVibronix, Inc. 2014 Long-Term Allurement Plan in acclimation to lath bounded regulations in adopted countries that do not correspond to the ambit of the NanoVibronix, Inc. 2014 Long-Term Allurement Plan. Unless assured beforehand by the lath of directors, the NanoVibronix, Inc. 2014 Long-Term Allurement Plan will expire on February 19, 2024. As of December 31, 2016, 115,404 options were available for approaching arising beneath the NanoVibronix, Inc. 2014 Long-Term Allurement Plan.

 

Director Compensation

 

The afterward table shows admonition concerning our directors, added than admiral who are our alleged authoritative officers, for the twelve months assured December 31, 2016:

 

 

 

On October 13, 2016, we entered into an agreement with Christopher Fashek to serve as the administrator of our lath of directors. Beneath this acceding Mr. Fashek will be paid $100,000 per year payable in semi-monthly installments. Mr. Fashek additionally accustomed options to acquirement 91,679 shares of our common b at an exercise accumulated of $5.50 per share. The options belong one-quarter annually over a four year aeon commencing on the one-year ceremony of the date of accepting and accepting a appellation of ten years.

 

  

Outside of advantage to our chairman, Christopher Fashek, we paid no advantage to our non-employee admiral for the one year aeon assured December 31, 2016 and have paid no advantage during 2017 to date. On March 25, 2015, we accustomed the afterward advantage amalgamation for independent directors: (i) an ceremony accepting of options to acquirement 20,000 shares of accustomed b to all absolute directors; (ii) an additional annual accepting of options to acquirement 5,000 shares of accustomed b for ceremony as the administrator of a lath committee; and (iii) an added ceremony accepting of options to acquirement 2,500 shares of accustomed b for ceremony as a member, but not the chairperson, of a lath committee. On July 16, 2016 we accustomed the afterward advantage amalgamation for absolute directors: (i) an additional annual accepting of options to acquirement 20,000 shares of accustomed b to the administrator of the lath of directors; and (ii) an additional annual accepting of options to acquirement 15,000 shares of accustomed b for ceremony as the vice-chairman of the lath of directors.

 

In affiliation with Mr. Greenstein’s resignation from our lath of directors, on March 30, 2017, we adapted the advantage agreement, anachronous March 25, 2015, with Mr. Greenstein for the accepting of an advantage to acquirement 30,000 shares of accustomed b at an exercise accumulated of $2.57 per share, all of which have vested, and the advantage agreement, anachronous July 18, 2016, with Mr. Greenstein for the accepting of an advantage to acquirement 40,000 shares of accustomed b at an exercise accumulated of $5.35 per share, all of which were vesting on July 18, 2017, to (i) beforehand the vesting of the advantage accustomed to Mr. Greenstein in 2016 so that it will be absolutely vested as of March 30, 2017, and (ii) admittance Mr. Greenstein to exercise the options accustomed in 2015 and 2016 at any time above-mentioned to the cessation of the advantage aeon as set alternating in the applicable advantage agreement.

 

Equity Advantage Plan Information

 

The afterward table provides assertive information as of December 31, 2016. with ceremony to our disinterestedness advantage diplomacy beneath which our disinterestedness antithesis are accustomed for issuance:

 

Number of securities to

be issued upon exercise of

outstanding options,

warrants, and rights

Weighted-average

exercise accumulated of

outstanding options,

warrants and rights

Number of securities remaining

available for future issuance  under

equity compensation plans (excluding

securities reflected in column (a))

 

 

Directors’ and Officers’ Accountability Insurance

 

We currently accepting directors’ and officers’ accountability allowance insuring our admiral and admiral adjoin accountability for acts or omissions in their capacities as admiral or officers, accountable to assertive exclusions.  Such allowance additionally insures us adjoin losses which we may incur in indemnifying our admiral and directors.  In addition, such bodies additionally accepting apology rights under applicable laws, and our affidavit of assimilation and bylaws.

 

   

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 

 

Generally, we do not accepting into related party diplomacy unless the assembly of the lath of admiral who do not accepting an assimilation in the abeyant transaction have reviewed the transaction and bent that (i) we would not be able to accepting bigger acceding by agreeable in a transaction with a non-related affair and (ii) the transaction is in our best interest. This activity applies about to any transaction in which we are to be a actor and the accumulated circuitous exceeds the bottom of $120,000 or one percent of the boilerplate of our absolute assets at ceremony for the antecedent two completed budgetary years, and in which any accompanying actuality had or will accepting a absolute or indirect material interest. This activity is not currently in writing.

 

On February 5, 2013, March 28, 2013, June 3, 2013, August 5, 2013, October 7, 2013, December 9, 2013, February 6, 2014, April 1, 2014, May 15, 2014, June 16, 2014, August 7, 2014, September 7, 2014, October 13, 2014, November 19, 2014 and December 11, 2014, we issued anchored convertible promissory notes to two funds controlled by Paul Packer. Mr. Packer served as our administrator from January 2005 until his abandonment on January 15, 2014, and is a benign buyer of added than 5% of our accustomed stock. The addendum were initially issued in the aboriginal aggregate principal accumulated of $100,000. On ceremony date listed above, such arch accumulated was added by $100,000. The fifteenth amended and restated anchored convertible promissory addendum issued on December 11, 2014, had an aboriginal accumulated arch accumulated of $1,500,000. In addition, as amended, the convertible promissory addendum were convertible either at the holders’ advantage or aloft maturity into shares of our Alternation C Adopted Stock. On April 27, 2015, the holders of the convertible promissory addendum adopted to convert the outstanding arch and assimilation thereunder into shares of our Alternation C Adopted Stock. On that date, an accumulated principal balance of $1,500,000 and $106,027 in accrued assimilation were adapted into 603,769 shares of Alternation C Adopted Stock.

 

In affiliation with the arising of the notes declared above, on ceremony of February 5, 2013, March 28, 2013, June 3, 2013, August 5, 2013, October 7, 2013, December 9, 2013, February 6, 2014, April 1, 2014, May 15, 2014, June 16, 2014, August 7, 2014, September 7, 2014, October 13, 2014, November 19, 2014 and December 11, 2014, we issued warrants to acquirement up to an accumulated of 37,594 shares of accustomed stock, with an exercise price of $2.66 per share, accountable to adjustment, to the two funds controlled by Mr. Packer. We accepting adapted and restated these warrants to lath accoutrement that block exercise if such exercise will aftereffect in the holder accepting benign buying of more than 9.99% of our accustomed stock. This limitation may be waived aloft not beneath than 61 days’ above-mentioned accounting apprehension to us, and will expire the day afore the applicative accreditation expires.

 

On February 25, 2014, we entered into a consulting acceding with AYTA Consulting, LLC, an article controlled by Mr. Packer, pursuant to which AYTA Consulting, LLC agreed to lath assertive cyberbanking and cardinal advising and consulting casework to us in barter for a belted b accolade grant of 57,143 shares of our accustomed stock, accountable to the acceding and altitude of a abstracted belted b accolade agreement, as the sole advantage for its accomplishment of the consulting services. The acceding was to be assured aloft (a) our antecedent public offering, (b) our able accountable to the advertisement requirements of Breadth 13(a) or 15(d) of the Antithesis Barter Act of 1934, as amended, (c) our merger, allotment barter or alliance (other than one in which our stockholders own a majority of the voting power of the outstanding shares of the absolute or accepting corporation) or a sale, lease, transfer, absolute allotment or other disposition of all or essentially all of our assets, (d) accounting abortion of the acceding by AYTA Consulting, LLC with 30 days accounting notice, or (e) our liquidation, dissolution or ambagious up. The 57,143 shares of belted b were accustomed to AYTA Consulting, LLC on February 25, 2014, pursuant to a belted b accolade agreement, absolutely vesting aloft the accident of any of the contest listed in (a), (b) or (c) above. On January 30, 2015, we entered into an acceding accouterment for the exchange of the shares accountable to the accolade acceding for an according cardinal of shares of Alternation C Adopted Stock, accountable to the aloft restrictions as the belted accustomed stock. The shares of belted Alternation C Adopted B were accountable to accident until vested and would accepting been absent if such shares accepting not vested on the afterwards of December 31, 2019, or the date of AYTA Consulting, LLC’s termination of ceremony with us. These shares vested aloft adequacy of our Anatomy 10 on April 10, 2015. Although the agreement has not been formally terminated, AYTA Consulting, LLC does not currently lath any casework to us and we do not pay any compensation to AYTA Consulting, LLC beneath this agreement.

  

In January and February 2015, we entered into antithesis acquirement agreements with assertive investors accouterment for the arising of shares of accustomed stock, Alternation C Preferred Stock and warrants to acquirement shares of our accustomed b (such warrants, the “Two-Year Warrants”). Pursuant to these agreements, we issued 666,667 shares of Alternation C Adopted Stock, Two-Year Warrants to acquirement 266,667 shares of accustomed stock at an exercise accumulated of $3.00 per allotment and Two-Year Warrants to acquirement 266,667 shares of accustomed b at an exercise price of $6.00 per share, for accumulated appliance of $2,000,000, to a accent of IDT Corporation, a benign buyer of more than 5% of our accustomed stock, and 166,667 shares of Alternation C Adopted Stock, Two-Year Warrants to acquirement 66,666 shares of common stock at an exercise accumulated of $3.00 per allotment and Two-Year Warrants to acquirement 66,666 shares of accustomed b at an exercise price of $6.00 per share, for accumulated appliance of $500,000, to entities controlled by Mr. Packer.

 

 

On March 25, 2015, we entered into a services agreement with Multigon Industries, Inc. (the “Services Agreement”). Dr. Stern serves as the admiral of Multigon. Pursuant to the casework agreement, we are adapted to pay Multigon $4,000 per ages in barter for the accouterment of services to us that lath the use of Multigon’s office, the accouterment of telephone, fax and utilities at such office, processing for aircraft of our products, chump service, aliment of quality, ceremony and acclimation annal and acquittal processing. On October 11, 2017, we added the ceremony fee beneath the Casework Acceding to $7,000 per month.

 

On March 25, 2015, we issued warrants to purchase up to 61,000 shares of accustomed b to AYTA Consulting, LLC, an article controlled by Mr. Packer, as appliance for the accouterment of admonition and abetment in affiliation with the filing of our Anatomy 10 and our able a accessible advertisement company. The warrants accepting an exercise accumulated of $2.57 per share, accountable to adjustment, and lath a accouterment that blocks exercise if such exercise will aftereffect in the holder accepting benign buying of added than 9.99% of our accustomed stock. This limitation may be waived aloft not beneath than 61 days’ above-mentioned accounting apprehension to us, and will expire the day afore the applicative warrant expires. See “Description of Securities—Warrants—March 2015 Warrants.”

 

On March 25, 2015, we entered into an agreement with Dr. Goldstein, a associate of our lath of directors, pursuant to which, as appliance for his efforts developing, pursuing approval of, and/or adopting bazaar acquaintance and accepting of our UroShield artefact and CathBot artefact and any added future vibrating urology catheter-related product, Dr. Goldstein is advantaged to a fee of $62.50 per assemblage of such accessories awash by us in the United States or Canada during the appellation of the agreement, beneath applicative deductions and tax withholdings. At our option, the per assemblage fees may be paid in the anatomy of banknote or shares of our accustomed stock. If any allocation is paid in cash, aural 30 days of receipt, Dr. Goldstein allegation acquirement an accumulated of accustomed b in the accessible market, accountable to any limitations or restrictions that may administrate beneath applicative laws, such that the acquirement accumulated of the accustomed b purchased added the accumulated of any common stock provided as acquittal of the per assemblage fees in the accustomed assay equals at atomic 50% of the per assemblage fees paid for that quarter (less applicative taxes). The appellation of the acceding continues until terminated. Either affair may aish the acceding for any reason by accouterment 90 canicule above-mentioned accounting apprehension to the added party.

 

Effective January 27, 2017, we entered into amendments to the Two-Year Warrants to extend the cessation date of the Two-Year Warrants for two added years. Pursuant to the accreditation amendment, the Two-Year Warrants to acquirement 266,667 shares of accustomed b at $3.00 per allotment and the Two-Year Warrants to acquirement 266,667 shares of accustomed b at $6.00 per allotment will expire on January 29, 2019, and the Two-Year Warrants to acquirement 140,000 shares of accustomed b at $3.00 per allotment and the Two-Year Warrants to acquirement 140,000 shares of accustomed stock at $6.00 per allotment will expire on February 10, 2019, and the Two-Year Warrants to acquirement 13,333 shares of accustomed b at $3.00 per allotment and the Two-Year Warrants to acquirement 13,333 shares of accustomed b at $6.00 per allotment will expire on February 23, 2019. The exercise accumulated and all added acceding of the aboriginal Two-Year Warrants abide the same. Holders of the Two-Year Warrants who entered into the accreditation alteration with us lath (i) a accent of IDT Corporation, a benign buyer of added than 5% of our accustomed stock, who holds Two-Year Warrants to acquirement 266,667 shares of accustomed b at $3.00 per allotment and Two-Year Warrants to acquirement 266,667 shares of accustomed b at $6.00 per share, and (ii) entities controlled by Mr. Packer and Mr. Packer, who holds Two-Year Warrants to acquirement 66,666 shares of accustomed b at $3.00 per allotment and Two-Year Warrants to acquirement 66,666 shares of accustomed b at $6.00 per share.

 

On March 1, 2017, we completed a bridge financing, pursuant to which we accustomed from Mr. Packer and entities controlled by Mr. Packer $250,000 of loans and issued to Mr. Packer and entities controlled by Mr. Packer 2017 Addendum in an accumulated arch accumulated of $250,000 and 2017 Warrants to purchase an accumulated of 100,000 shares of accustomed b at an antecedent exercise accumulated of $5.90 per share, accountable to adjustment, and are anon exercisable. See “Management’s Altercation and Assay of Cyberbanking Activity and After-effects of Operations—Recent Events,” “Description of Securities—Warrants—2017 Warrants” and “Recent Sales of Unregistered Securities” for added admonition on the acceding of the 2017 Addendum and the 2017 Warrants.

 

 

On May 3, 2017, we completed a arch financing, pursuant to which we accustomed from Mr. Packer $30,000 of loans and issued to Mr. Packer 2017 Addendum in an accumulated arch amount of $30,000 and 2017 Warrants to acquirement an accumulated of 12,000 shares of accustomed b at an antecedent exercise accumulated of $5.90 per share, accountable to adjustment, and are anon exercisable. See “Management’s Altercation and Assay of Financial Condition and After-effects of Operations—Recent Events,” “Description of Securities—Warrants—2017 Warrants” and “Recent Sales of Unregistered Securities” for added admonition on the acceding of the 2017 Addendum and the 2017 Warrants.

 

On June 3, 2017, we completed a bridge financing, pursuant to which we accustomed from an article controlled by Mr. Packer $500,000 of loans and issued to an article controlled by Mr. Packer 2017 Addendum in an accumulated arch accumulated of $500,000 and 2017 Warrants to acquirement an accumulated of 200,000 shares of accustomed b at an antecedent exercise accumulated of $5.90 per share, accountable to adjustment, and are anon exercisable. See “Management’s Discussion and Assay of Cyberbanking Activity and After-effects of Operations—Recent Events,” “Description of Securities—Warrants—2017 Warrants” and “Recent Sales of Unregistered Securities” for added admonition on the acceding of the 2017 Notes and the 2017 Warrants.

    

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The afterward table sets alternating information with ceremony to the benign buying of our accustomed b as of October 27, 2017 by:

 

 

 

 

 

The percentages of accustomed b beneficially owned are appear on the abject of regulations of the Antithesis and Barter Commission administering the affirmation of beneficial ownership of securities. Beneath the rules of the Antithesis and Barter Commission, a actuality is accounted to be a benign owner of a aegis if that actuality has or shares voting power, which includes the adeptness to vote or to absolute the voting of the security, or beforehand power, which includes the adeptness to actuate of or to absolute the disposition of the security.

 

Certain of our affiliates accepting indicated an assimilation in accommodating in this alms at the alms price. However, because break of assimilation are not binding agreements or commitments to purchase, these affiliates may actuate to acquirement beneath antithesis than they accepting adumbrated an interest in purchasing or not to acquirement any antithesis in this offering. The afterward table does not reflect any potential purchases by these affiliates.

 

Except as indicated in the footnotes to this table, ceremony benign buyer alleged in the table beneath has sole voting and sole beforehand adeptness with respect to all shares beneficially endemic and ceremony person’s abode is c/o NanoVibronix, Inc., 9 Derech Hashalom Street, Nesher, Israel 36651. As of October 27, 2017, we had 2,632,710 shares of accustomed b and 2,310,256 shares of Alternation C Preferred Stock outstanding. In accession to the shares of accustomed b appear below, as declared in the footnotes beneath the table, six stockholders beneficially own 100% of our issuable and issued Alternation C Adopted Stock.

 

 

 

* Represents buying of beneath than 1%.

 

 

 

 

 

 

 

Does not lath the following, which Mr. Packer also beneficially owns: (i) 917,590 shares of accustomed b issuable aloft about-face of Alternation C Adopted B captivated by Globis Capital Partners, L.P., (ii) 298,919 shares of accustomed b issuable aloft about-face of Alternation C Adopted B captivated by Globis Overseas Fund, Ltd., (iii) 51,274 shares of accustomed b issuable aloft about-face of alternation C adopted captivated by Globis International Investments L.L.C., (iv) 57,143 shares of accustomed b issuable aloft about-face of Alternation C Adopted B captivated by AYTA Consulting, LLC and (v) 210,883 shares of accustomed b issuable aloft about-face of Alternation C Adopted B captivated by Mr. Packer. These shares of accustomed b issuable aloft about-face of the Alternation C Adopted B are excluded, alike admitting the acceding of the Alternation C Preferred Stock acquiesce for about-face into accustomed b and voting on an as if adapted abject with the accustomed stock, because these rights are banned if the exercise of such about-face or voting rights will aftereffect in the holder accepting benign buying of more than 9.99% of the issuer’s accustomed stock.

 

 

Does not lath the following: (i) 162,073 shares of accustomed b that may be purchased by Globis Basal Partners, L.P. aloft the exercise of warrants, and 31,927 shares of common stock that can be purchased by about-face of a agenda payable (ii) 60,955 shares of accustomed b that may be purchased by Globis Overseas Fund, Ltd. aloft the exercise of warrants and 11,707 shares of accustomed b that can be purchased by about-face of a note payable, (iii) 61,000 shares of accustomed b that may be purchased by AYTA Consulting, LLC aloft the exercise of warrants and (iv) 95,672 shares of accustomed b that may be purchased by Mr. Packer aloft the exercise of accreditation and 15,871 shares of accustomed stock that can be purchased by about-face of agenda payable (iv) 200,000 shares of accustomed b that may be purchased by Globis Asia, L.P. aloft the exercise of warrants, and 104,271 shares of accustomed b that can be purchased by about-face of a agenda payable These shares of accustomed b are afar because the warrants lath accoutrement that block exercise if such exercise will aftereffect in the holder accepting benign buying of added than 9.99% of our accustomed stock.

  

Mr. Packer is the managing associate of Globis Capital Advisors, L.L.C., which is the accustomed accomplice of Globis Basal Partners, L.P. Mr. Packer is the managing associate of Globis Capital, L.L.C., which is the accustomed accomplice of Globis Basal Management, L.P., which is the beforehand administrator of Globis Overseas Fund, Ltd. Mr. Packer is additionally the managing associate of Globis All-embracing Investments L.L.C, and Globis Asia LP. Mr. Packer is deemed to accepting benign buying of the shares captivated by Globis Basal Partners, L.P., Globis Overseas Fund, Ltd., Globis Asis LP. and Globis All-embracing Investments L.L.C. Mr. Packer additionally controls, and is accounted to accepting benign buying of the shares held by, AYTA Consulting, LLC. 

 

 

 

 

  

Does not lath 133,334 shares of accustomed stock that may be purchased by AIGH Beforehand Partners, L.P. aloft the exercise of warrants. These shares of accustomed b are excluded because the warrants lath accoutrement that block exercise if such exercise will aftereffect in the holder accepting benign ownership of added than 4.99% of our accustomed stock.

 

 

 

 

 

 

 

 

 

 

MATERIAL U.S. FEDERAL TAX CONSEQUENCES

 

The afterward is a accustomed arbitrary of material U.S. federal assets tax after-effects of the acquisition, ownership, and disposition of our warrants and shares of our accustomed stock or Adopted B in the alms and the acquisition, ownership, and disposition of our shares of accustomed b issuable upon conversion of the Adopted B or aloft the exercise of our warrants.

 

Scope of this Summary

 

This arbitrary is for accustomed information purposes abandoned and does not acceptation to be a complete assay of all abeyant U.S. federal assets tax after-effects of the acquisition, ownership and disposition of our warrants, accustomed b and Adopted Stock. Except as accurately set alternating below, this summary does not altercate applicative tax advertisement requirements. In addition, this arbitrary does not booty into ceremony the abandoned facts and diplomacy of any authentic holder that may affect the U.S. federal assets tax after-effects to such holder. Accordingly, this arbitrary is not brash to be, and should not be construed as, acknowledged or U.S. federal assets tax admonition with ceremony to any particular holder. Ceremony holder should argue its own tax admiral apropos the U.S. federal, accompaniment and local, and non-U.S. tax consequences of the acquisition, buying and disposition of our warrants, accustomed b and Adopted Stock.

 

No acknowledged appraisal from U.S. acknowledged counsel or cardinal from the Centralized Acquirement Ceremony (the “IRS”) has been requested, or will be obtained, apropos the U.S. federal assets tax after-effects of the acquisition, buying and disposition of our warrants, accustomed b and Adopted Stock. This arbitrary is not bounden on the IRS, and the IRS is not precluded from demography a position that is altered from, and contrary to, the positions taken in this summary.

 

Authorities

 

This arbitrary is based on the Centralized Revenue Code of 1986, as adapted (the “Code”), Treasury Regulations, appear rulings of the IRS, appear administrative positions of the IRS, and U.S. cloister decisions that are applicative and, in ceremony case, as in aftereffect and available, as of the date of this prospectus. Any of the authorities on which this arbitrary is based could be afflicted in a absolute and adverse abode at any time, and any such change could be activated on a attendant basis.

 

U.S. Holders

 

As acclimated in this summary, the appellation “U.S. Holder” agency a benign buyer of (i) our warrants, accustomed b or Adopted B acquired pursuant to this prospectus or (ii) our accustomed b acquired aloft about-face of the Adopted B or exercise of our warrants that is for U.S. federal income tax purposes:

 

 

 

 

 

 

Non-U.S. Holders

 

The appellation “Non-U.S. Holder” means any benign buyer of (i) our warrants, accustomed b or Adopted B acquired pursuant to this announcement or (ii) our common b acquired aloft about-face of the Adopted B or aloft the exercise of our warrants that is not a U.S. Holder.

   

Holders Accountable to Adapted U.S. Federal Assets Tax Rules

 

This arbitrary deals abandoned with bodies or entities who (i) accepting our warrants, accustomed b or Adopted B in the alms or (ii) who accepting our accustomed b upon the about-face of the Adopted B or aloft the exercise of our warrants, and who ascendancy such b as a basal asset within the acceptation of Breadth 1221 of the Cipher (generally, acreage captivated for beforehand purposes). This arbitrary does not abode all aspects of U.S. federal assets taxation that may be applicative to holders in ablaze of their authentic diplomacy or to holders subject to adapted assay beneath U.S. federal assets tax law, such as (without limitation): banks, allowance companies, and other cyberbanking institutions; dealers or traders in securities, t or adopted currencies; adapted beforehand companies; U.S. expatriates or aloft abiding association of the U.S.; bodies captivation our warrants, accustomed b or Adopted B as part of a straddle, accustomed cyberbanking position, constructed security, hedge, about-face transaction or added chip investment; persons captivation our warrants, accustomed b or Adopted B as a aftereffect of a able sale; entities that accepting our warrants, common b or Adopted B that are brash as partnerships for U.S. federal assets tax purposes and ally in such partnerships; real acreage beforehand trusts; U.S. Holders that accepting a “functional currency” added than the U.S. dollar; holders that acquired our warrants, accustomed b or Adopted B in affiliation with the exercise of abettor b options or otherwise as appliance for services; or holders that are “controlled adopted corporations” or “passive adopted investment companies.” Holders that are accountable to adapted accoutrement beneath the Code, including holders declared anon above, should argue their own tax admiral apropos the U.S. federal, accompaniment and local, and non-U.S. tax after-effects arising from and apropos to the acquisition, buying and disposition of our warrants, accustomed b and Adopted Stock.

 

If an article or acclimation that is classified as a affiliation (or added “pass-through” entity) for U.S. federal assets tax purposes holds our warrants, common stock or Adopted Stock, the U.S. federal assets tax after-effects to such article and the ally (or added owners) of such entity generally will depend on the activities of the article and the cachet of such ally (or owners). This arbitrary does not address the tax after-effects to any such buyer or entity. Ally (or added owners) of entities or arrange that are classified as partnerships or as “pass-through” entities for U.S. federal assets tax purposes should argue their own tax advisors regarding the U.S. federal assets tax after-effects arising from and apropos to the acquisition, ownership, and disposition of our warrants, accustomed b and Adopted Stock.

 

Tax After-effects Not Addressed

 

This arbitrary does not abode the U.S. state and local, U.S. federal acreage and gift, U.S. federal accession minimum tax, or non-U.S. tax after-effects to holders of the acquisition, ownership, and disposition of our warrants, accustomed b or Adopted Stock. Ceremony holder should argue its own tax admiral apropos the U.S. accompaniment and local, U.S. federal acreage and gift, U.S. federal accession minimum tax, and non-U.S. tax after-effects of the acquisition, ownership, and disposition of our warrants, accustomed b and Adopted Stock.

 

 

U.S. Federal Assets Tax After-effects to U.S. Holders of the Acquisition, Buying and Disposition of Our Warrants, Accustomed B and Adopted Stock

 

Distributions

 

Distributions fabricated on our accustomed stock and Adopted B about will be included in a U.S. Holder’s assets as accustomed allotment assets to the admeasurement of our current and accumulated antithesis and profits (determined beneath U.S. federal assets tax principles) as of the end of our taxable year in which the administering occurs. Assets accustomed by non-corporate U.S. Holders are about burdened at a best tax rate of 20%, provided assertive captivation aeon and added requirements are satisfied. Distributions in antithesis of our accustomed and accumulated earnings and profits will be brash as a acknowledgment of basal to the admeasurement of a U.S. Holder’s adapted tax abject in our common stock and Adopted B and thereafter as basal accretion from the auction or barter of such stock, which will be taxable according to rules discussed beneath the annex “Sale, Assertive Redemptions or Added Taxable Dispositions of our warrants, accustomed stock and Adopted Stock,” below. Assets accustomed by a accumulated holder may be able for a assets accustomed deduction, subject to applicative limitations.

 

Sale, Assertive Redemptions or Added Taxable Dispositions of Our Warrants, Accustomed B and Adopted Stock

 

Upon the sale, redemption, or added taxable disposition of our warrants, accustomed b or Adopted Stock, a U.S. Holder about will admit basal accretion or accident equal to the aberration amid (i) the accumulated of banknote and the fair bazaar accumulated of any acreage accustomed aloft such taxable disposition and (ii) the U.S. Holder’s adapted tax abject in the warrants or shares, as applicable. Such basal accretion or accident will be long-term basal accretion or accident if a U.S. Holder’s captivation aeon in our warrants, accustomed b or Adopted B is more than one year at the time of the taxable disposition. Abiding basal assets accustomed by non-corporate U.S. Holders will generally be accountable to a best U.S. federal assets tax accumulated of 20%. Deductions for basal losses are accountable to limitations.

   

Conversion of Adopted B Into Accustomed Stock

 

A U.S. Holder will not admit any gain or accident by acumen of accepting our accustomed b aloft about-face of the Adopted Stock, except that the fair bazaar accumulated of any shares of our accustomed shares attributable to allotment arrearages about will be brash as a able distribution, and will be taxable, as declared aloft beneath “—Distributions.”. A U.S. Holder’s antecedent tax abject in our common b accustomed aloft the about-face of its Adopted B should be according to such U.S. Holder’s tax abject in its converted Adopted Stock, added than accustomed b attributable to allotment arrearages. A U.S. Holder’s captivation aeon for the accustomed b accustomed aloft the about-face of its Adopted B should backpack over from the adapted Adopted Stock, other than accustomed b attributable to allotment arrearages.

 

Exercise of Warrants

 

A U.S. Holder about will not recognize gain or accident on the exercise of our warrants and accompanying cancellation of our accustomed b (unless banknote is accustomed in lieu of the issuance of a apportioned allotment of our accustomed stock). A U.S. Holder’s antecedent tax abject in our accustomed b accustomed on the exercise of a accreditation should be according to the sum of (a) such U.S. Holder’s tax abject in such accreditation added (b) the exercise price paid by such U.S. Holder on the exercise of such warrant. A U.S. Holder’s captivation aeon for our accustomed b accustomed on the exercise of a accreditation should activate on the date that such accreditation is acclimatized by such U.S. Holder.

 

Certain Adjustments to the Warrants

 

Under Breadth 305 of the Code, an adjustment to the cardinal of shares of our accustomed b that will be issued on the exercise of the warrants, or an acclimation to the exercise price of our warrants, may be brash as a able administering to a U.S. Holder of the warrants if, and to the admeasurement that, such acclimation has the aftereffect of accretion such U.S. Holder’s commensurable assimilation in our “earnings and profits” or assets, depending on the diplomacy of such acclimation (for example, if such acclimation is to atone for a distribution of banknote or added acreage to our shareholders). Adjustments to the exercise accumulated of a accreditation fabricated pursuant to a bona fide reasonable adjustment blueprint that has the aftereffect of preventing concoction of the assimilation of the holders of our warrants should generally not aftereffect in a able distribution.

 

Other U.S. Federal Assets Tax After-effects Applicative to U.S. Holders

 

Additional Tax on Passive Income

 

Individuals, estates and assertive trusts whose assets exceeds assertive thresholds will be adapted to pay a 3.8% Medicare surtax on “net beforehand income” including, amid added things, assets on and net accretion from the disposition of our warrants, accustomed b or Adopted Stock. U.S. Holders should argue their own tax admiral apropos the effect, if any, of this tax on their buying and disposition of our warrants, accustomed b or Adopted Stock.

 

Information Advertisement and Advancement Withholding

 

Information advertisement requirements generally will administrate to payments of assets on our accustomed b or Adopted B and to the accretion of a auction of our warrants, common stock or Adopted B paid to a U.S. Holder unless the U.S. Holder is an absolved almsman (such as a corporation). Advancement withholding will administrate to those payments if the U.S. Holder fails to lath its absolute aborigine identification number, or certification of absolved status, or if the U.S. Holder is notified by the IRS that it has bootless to abode in abounding payments of assimilation and dividend income. Advancement denial is not an added tax, and any amounts withheld beneath the advancement denial rules about will be accustomed as a acquittance or a acclaim adjoin a U.S. Holder’s U.S. federal assets tax liability, if any, provided the required information is furnished in a adapted abode to the IRS.

 

 

U.S. Federal Assets Tax After-effects to Non-U.S. Holders of the Acquisition, Buying and Disposition of Our Warrants, Accustomed B and Adopted Stock

 

Conversion of Adopted B Into Accustomed Stock

 

A Non-U.S. Holder will not admit any gain or accident by acumen of accepting our accustomed b aloft about-face of the Adopted Stock, except that the fair bazaar value of any shares of our accustomed b attributable to allotment arrearages about will be brash as a able distribution, and will be taxable, as declared beneath beneath “U.S. Federal Assets Tax After-effects to Non-U.S. Holders of the Acquisition, Ownership and Disposition of Our Warrants, Accustomed B and Adopted B —Distributions.” A Non-U.S. Holder’s initial tax abject in the accustomed shares accustomed aloft the about-face of its Adopted B should be according to such Non-U.S. Holder’s tax abject in its adapted Adopted Stock, added than accustomed b attributable to allotment arrearages. A Non-U.S. Holder’s holding aeon for the accustomed b accustomed aloft the about-face of its Adopted B should backpack over from the adapted Preferred Stock, added than accustomed b attributable to allotment arrearages.

 

Exercise of Warrants

 

A Non-U.S. Holder about will not admit accretion or accident on the exercise of a warrant and accompanying cancellation of our accustomed b (unless banknote is accustomed in lieu of the arising of a apportioned allotment of common stock and assertive added altitude are present, as discussed beneath beneath “Sale or Added Taxable Disposition of Our Warrants, Common B and Adopted Stock”). A Non-U.S. Holder’s antecedent tax abject in our accustomed b accustomed on the exercise of a accreditation should be according to the sum of (a) such Non-U.S. Holder’s tax abject in such accreditation added (b) the exercise price paid by such Non-U.S. Holder on the exercise of such warrant. A Non-U.S. Holder’s captivation aeon for our accustomed b received on the exercise of a accreditation should activate on the date that such accreditation is acclimatized by such Non-U.S. Holder.

 

Certain Adjustments to the Warrants

 

Under Breadth 305 of the Code, an acclimation to the cardinal of our accustomed b that will be issued on the exercise of our warrants, or an acclimation to the exercise accumulated of our warrants, may be brash as a constructive distribution to a Non-U.S. Holder of our warrants if, and to the admeasurement that, such acclimation has the aftereffect of accretion such Non-U.S. Holder’s commensurable assimilation in our “earnings and profits” or assets, depending on the circumstances of such acclimation (for example, if such acclimation is to atone for a administering of banknote or added acreage to our shareholders).

  

Distributions

 

Distributions on our accustomed b or Preferred Stock will accumulated assets for U.S. federal assets tax purposes to the admeasurement paid from our accustomed and accumulated earnings and profits, as bent beneath U.S. federal assets tax principles. To the admeasurement those distributions beat our accustomed and accumulated antithesis and profits, they will accumulated a acknowledgment of basal and will aboriginal abate a Non-U.S. Holder’s basis in our accustomed shares or Adopted Stock, but not beneath zero, and again will be brash as accretion from the auction of stock, which will be taxable according to rules discussed beneath the annex “Sale or Added Taxable Disposition of Our Warrants, Accustomed Stock And Adopted Stock,” below. Any assets paid to a Non-U.S. Holder with ceremony to our accustomed shares or Adopted Stock generally will be accountable to denial tax at a 30% gross rate, accountable to any absolution or lower accumulated beneath an applicative treaty if the Non-U.S. Holder provides us with a appropriately accomplished IRS Anatomy W-8BEN-E or W-8BEN. A Non-U.S. Holder that provides us with a appropriately accomplished IRS Anatomy W-8ECI (or added applicative form) apropos to assets finer affiliated with the conduct of a trade or business aural the United States will not be accountable to the 30% denial tax.

 

Dividends that are finer connected with the conduct of a barter or business aural the United States are not accountable to the denial tax (assuming able certification and disclosure), but instead are accountable to U.S. federal assets tax on a net assets abject at applicative accelerating abandoned or corporate rates, accountable to an applicative accord that provides otherwise. Any such finer affiliated assets accustomed by a non-U.S. association may, beneath assertive circumstances, be accountable to an added annex profits tax on its finer connected earnings and profits at a 30% rate, accountable to any absolution or lower accumulated as may be authentic by an applicative assets tax treaty.

 

A Non-U.S. Holder of our accustomed shares or Adopted B who wishes to affirmation the ceremony of an applicative accord accumulated or absolution is adapted to amuse assertive certification and added requirements. If a Non-U.S. Holder is able for an absolution from or a bargain accumulated of U.S. denial tax pursuant to an assets tax treaty, it may accepting a acquittance of any antithesis amounts withheld by adapted filing an adapted affirmation for refund with the IRS.

 

Sale or Added Taxable Disposition of Our Warrants, Common Stock and Adopted Stock

 

In general, a Non-U.S. Holder of our warrants, common b or Adopted B will not be accountable to U.S. federal assets tax on accretion accustomed from a sale, exchange, or other taxable disposition of such warrants or stock, unless:

 

 

 

 

  

Information Advertisement and Advancement Withholding

 

Generally, we allegation abode annually to the IRS and to Non-U.S. Holders the accumulated of assets paid on our accustomed b and Adopted B to Non-U.S. Holders and the amount of tax, if any, withheld with ceremony to those payments. Copies of the admonition allotment advertisement such assets and withholding may additionally be fabricated accessible to the tax authorities in the country in which a Non-U.S. Holder resides beneath the accoutrement of an applicable assets tax treaty.

 

In general, a Non-U.S. Holder will not be accountable to advancement denial with ceremony to payments of assets that we make, provided we accepting a ceremony affair certain requirements to the aftereffect that the Non-U.S. Holder is not a U.S. actuality and we do not accepting absolute adeptness or acumen to know that the holder is a U.S. person, as authentic beneath the Code, that is not an absolved recipient. The requirements for the statement will be met if (1) the Non-U.S. Holder provides its name, abode and U.S. aborigine identification number, if any, and certifies, under apology of perjury, that it is not a U.S. actuality (which acceptance may be fabricated on IRS Anatomy W-8BEN or W-8BEN-E, as applicable) or (2) a cyberbanking academy captivation the accoutrement on ceremony of the Non-U.S. Holder certifies, beneath apology of perjury, that such ceremony has been accustomed by it and furnishes us or our advantageous abettor with a archetype of the statement. In addition, a Non-U.S. Holder will be accountable to admonition advertisement and, depending on the circumstances, advancement denial with ceremony to payments of the accretion of a auction of our warrants, accustomed b or Adopted B aural the United States or conducted through certain U.S.-related cyberbanking intermediaries, unless the ceremony declared aloft has been received, and we do not accepting absolute knowledge or acumen to apperceive that a holder is a U.S. person, as authentic beneath the Code, that is not an absolved recipient, or the Non-U.S. Holder contrarily establishes an exemption. Advancement denial is not an added tax and any amounts withheld beneath the backup withholding rules will be accustomed as a acquittance or a acclaim adjoin a Non-U.S. Holder’s U.S. federal assets tax liability, if any, provided the adapted admonition is furnished in a adapted abode to the IRS.

 

Rules Apropos to Adopted Accounts

 

Generally, we will be adapted to withhold tax at a accumulated of 30% on assets in ceremony of our accustomed b and Adopted Stock, and gross accretion from the auction of our common b and Adopted B captivated by or through assertive adopted entities, in the case of dividends, and alpha afterwards December 31, 2018, in the case of such gross proceeds, unless such article is in acquiescence with its obligations beneath the Adopted Account Tax Acquiescence Act, or “FATCA.”

 

 

DESCRIPTION OF SECURITIES

 

We accepting accustomed 25,000,000 shares of basal stock, par accumulated $0.001 per share, of which 20,000,000 are shares of accustomed b and 5,000,000 are shares of “blank check” adopted stock. On October 27, 2017, there were 2,632,710 shares of accustomed b and 2,310,256 shares of Series C Adopted B issued and outstanding, and no shares of Adopted B issued and outstanding. We currently accepting 3,000,000 shares of adopted b appointed as Alternation C Adopted B and will accepting 100,000 shares of adopted b appointed as Series D Adopted Stock. The accustomed and unissued shares of accustomed b and the accustomed and bearding shares of preferred stock are accessible for arising afterwards added activity by our stockholders, unless such activity is adapted by applicative law or the rules of any b barter on which our antithesis may be listed. Unless approval of our stockholders is so required, our lath of admiral does not intend to seek stockholder approval for the arising and auction of our accustomed b or preferred stock.

 

Common Stock

 

The holders of accustomed b are entitled to one vote per share. Our affidavit of assimilation does not lath for accumulative voting. All of our admiral ascendancy office for one-year acceding until the acclamation and accomplishment of their successors. The holders of our accustomed b are advantaged to receive ratably such dividends, if any, as may be declared by the lath of admiral out of accurately accessible funds. Aloft liquidation, dissolution or winding-up, the holders of our accustomed b are advantaged to allotment ratably in all assets that are accurately available for distribution. The holders of our accustomed b accepting no preemptive, subscription, accretion or about-face rights. The rights, preferences and privileges of holders of our accustomed b are accountable to, and may be abnormally afflicted by, the rights of the holders of any alternation of adopted stock, which may be appointed alone by activity of the lath of admiral and issued in the future.

 

The alteration abettor and abettor for our common b is VStock Transfer, LLC. The alteration agent’s abode is 18 Lafayette Place, Woodmere, New York 11598 Our common stock is listed on the OTCQB beneath the attribute “NAOV,” and we accepting activated to ceremony our accustomed b on The NASDAQ Capital Market beneath the attribute “NAOV.”

 

Preferred Stock

 

The lath of admiral is authorized, subject to any limitations assigned by law, afterwards added vote or activity by the stockholders, to affair from time to time shares of preferred b in one or added series. Ceremony such alternation of adopted b shall accepting such cardinal of shares, designations, preferences, voting powers, qualifications, and adapted or about rights or privileges as shall be bent by the lath of directors, which may include, amid others, allotment rights, voting rights, defalcation preferences, about-face rights and preemptive rights. Issuance of adopted b by our lath of admiral may aftereffect in such shares accepting allotment and/or defalcation preferences senior to the rights of the holders of our accustomed b and could adulterate the voting rights of the holders of our accustomed stock.

 

Prior to the arising of shares of each series of adopted stock, the lath of admiral is adapted by the Delaware Accustomed Association Law and our affidavit of incorporation to accept resolutions and book a affidavit of appellation with the Secretary of Accompaniment of the Accompaniment of Delaware. The certificate of appellation fixes for ceremony chic or alternation the designations, powers, preferences, rights, qualifications, limitations and restrictions, including, but not apprenticed to, some or all of the following:

 

 

 

 

 

  

 

 

 

 

 

Once appointed by our lath of directors, each alternation of adopted b may accepting specific cyberbanking and added terms.

 

Series C Convertible Adopted Stock

 

On October 27, 2017, there were 2,310,256 shares of Alternation C Adopted B issued and outstanding, captivated by 6 stockholders.

 

Each allotment of Alternation C Adopted Stock is convertible into one allotment of accustomed b (subject to adjustment) at any time at the advantage of the holders, provided that each holder would be banned from converting Alternation C Adopted B into shares of accustomed b if, as a aftereffect of such conversion, any such holder, calm with its affiliates, would beneficially own added than 9.99% of the absolute cardinal of shares of common stock again issued and outstanding. This limitation may be waived with ceremony to a holder aloft such holder’s accouterment of not beneath than 61 days’ above-mentioned accounting apprehension to us.

 

In the accident of liquidation, dissolution, or ambagious up, whether voluntarily or involuntarily, ceremony holder of Alternation C Adopted B could accepting to accepting the amount of cash, antithesis or added acreage to which such holder would be advantaged to accepting with ceremony to ceremony allotment of Alternation C Preferred B if such allotment of Alternation C Adopted B had been adapted to accustomed b anon above-mentioned to such liquidation, dissolution, or ambagious up (without giving aftereffect for such purposes to the 9.99% benign buying limitation), accountable to the best rights of holders of any chic or alternation of our basal b accurately baronial by its acceding arch to the Series C Adopted B as to distributions of assets aloft such event.

 

Shares of Alternation C Adopted B are not advantaged to accepting any dividends, unless and until accurately declared by the lath of directors. However, holders of Series C Adopted B are advantaged to accepting assets on shares of Alternation C Adopted B according (on an as-if-converted-to-common-stock basis) to and in the aloft anatomy as assets absolutely paid on shares of the accustomed b aback such assets are accurately declared by the lath of directors. We are not answerable to redeem or repurchase any shares of Alternation C Adopted Stock. Shares of Series C Adopted B are not contrarily advantaged to any accretion rights, or binding biconcave armamentarium or akin armamentarium provisions.

 

Each holder of Alternation C Adopted Stock is advantaged to the cardinal of votes according to the cardinal of able shares of accustomed b into which the shares of Alternation C Preferred Stock captivated by such holder are again convertible (subject to the 9.99% benign buying limitations) with ceremony to any and all diplomacy presented to the stockholders for their activity or consideration. Holders of Alternation C Adopted B vote together with the holders of accustomed b as a distinct class, except as provided by law and except that the accord of holders of a majority of the outstanding Alternation C Adopted B is adapted to adapt the acceding of the Alternation C Adopted Stock.

  

 

Series D Convertible Adopted B Actuality Issued in this Offering

 

The afterward arbitrary of assertive acceding and provisions of the Adopted B offered in this alms is accountable to, and able in its absoluteness by advertence to, the terms and accoutrement set alternating in our affidavit of appellation of preferences, rights and limitations of the Adopted Stock, which has been filed as an display to the allotment ceremony of which this announcement is a part. You should assay a archetype of the certificate of appellation of the Adopted B for a complete description of the acceding and altitude of the Adopted Stock.

 

Conversion .   Each share of Adopted B is convertible at any time at the holder’s advantage into 1,000 shares of accustomed b (subject to the benign buying limitations as provided in the accompanying affidavit of appellation of preferences), accountable to adjustment as provided in the affidavit of designation, provided that the holder will be banned from converting Adopted B into shares of our accustomed b if, as a aftereffect of such conversion, the holder, calm with its affiliates, would own added than 4.99% of the absolute cardinal of shares of our accustomed b again issued and outstanding. However, any holder may accepting or abatement such percentage to any added allotment not in antithesis of 9.99%, provided that any accepting in such allotment shall not be effective until the 61st day afterwards such apprehension to us.

 

Rank; Liquidation .   In the accident of our liquidation, dissolution, or ambagious up, holders of our Adopted B will be advantaged to accepting the amount of cash, antithesis or added acreage to which such holder would be advantaged to accepting with ceremony to such shares of Preferred Stock if such shares had been adapted to accustomed b anon above-mentioned to such accident (without giving aftereffect for such purposes to the 4.99% or 9.99% benign buying limitation, as applicable) accountable to the best rights of holders of any class or alternation of our basal b accurately baronial by its acceding arch to the Adopted B as to distributions of assets upon such event, whether voluntarily or involuntarily.

 

Dividend Rights .   Shares of Adopted B are not advantaged to accepting any dividends, unless and until accurately declared by our lath of directors. However, holders of our Adopted B are advantaged to accepting assets on shares of Adopted B according (on an as-if-converted-to-common-stock basis) to and in the aloft anatomy as assets absolutely paid on shares of the accustomed b aback such assets are accurately declared by our lath of directors, except for b assets or distributions payable in shares of accustomed b on shares of accustomed stock or any added accustomed b equivalents for which the about-face accumulated will be adjusted. We are not answerable to redeem or repurchase any shares of Adopted Stock. Shares of Adopted B are not contrarily advantaged to any accretion rights, or binding sinking fund or akin armamentarium provision.

 

Voting Rights .   The holders of the Adopted B accepting no voting rights, except as adapted by law. We may not disproportionally adapt or change adversely the powers, preferences and rights of the Adopted B or adapt the affidavit of appellation or adapt our certificate of assimilation or bylaws in any abode that disproportionally abnormally affect any adapted of the holders of the Adopted Stock without the acknowledging vote of the holders of a majority of the shares of Adopted B again outstanding.

 

Failure to Buck About-face Shares.    If we abort to adapted buck shares of accustomed b aloft about-face of the Adopted B (the “Conversion Shares”), within the time aeon authentic in the affidavit of appellation (within three trading canicule afterwards allegation of the apprehension of conversion, or any beneath accustomed acclimation aeon in aftereffect with ceremony to trading bazaar on the date apprehension is delivered), and if the holder has not acclimatized its Buy-In rights as declared beneath with ceremony to such shares, again we are answerable to pay to the holder, as asleep damages, an accumulated according to $50 per business day (increasing to $100 per trading day afterwards the third trading day and to $200 per trading day afterwards the sixth trading day afterwards such amercement activate to accrue) for ceremony trading day afterward the adapted allegation date for the About-face Shares for adapted allegation beneath the affidavit of designation, for each $5,000 of the declared accumulated of the Adopted B actuality adapted which are not adapted delivered.

 

 

Compensation for Buy-In on Abortion to Timely Buck Shares.    If we abort to adapted buck the About-face Shares to the holder, and if afterwards the required allegation date the holder is adapted by its abettor to acquirement (in an accessible bazaar transaction or otherwise), or the holder’s brokerage aing contrarily purchases, shares of accustomed b to buck in accomplishment of a auction by the holder of the Conversion Shares which the holder advancing accepting aloft such about-face (a “Buy-In”), again we are answerable to (A) pay in banknote to the holder the amount, if any, by which (x) the holder’s absolute acquirement accumulated (including allowance commissions, if any) for the shares of accustomed b so purchased exceeds (y) the accumulated acquired by abacus (1) the accumulated cardinal of shares of accustomed b the holder was advantaged to accepting from the about-face at affair and (2) the absolute auction accumulated at which the advertise acclimation giving acceleration to such acquirement obligation was accomplished (including any allowance commissions), and (B) at the option of the holder, either reinstate the allocation of the Adopted B according to the cardinal of shares of Adopted B submitted for which such about-face was not accustomed (in which case such about-face shall be accounted rescinded) or buck to the holder the number of shares of accustomed b that would accepting been issued had we adapted complied with its about-face and allegation obligations.

 

Fundamental Transaction.    If, at any time while the Adopted B is outstanding, (i) we, in one or added accompanying diplomacy furnishings any alliance or consolidation of us with or into accession person, (ii) we aftereffect any sale, lease, license, assignment, transfer, conveyance or added disposition of all or essentially all of its assets in one or a alternation of accompanying transactions, (iii) we complete any breakable activity or exchange offer (whether by us or accession person) pursuant to which holders of accustomed b are able to sell, breakable or barter their shares for added securities, banknote or property, or (iv) we aftereffect any reclassification of the accustomed b or any compulsatory share exchange pursuant to which the accustomed b is finer adapted into or exchanged for added securities, banknote or property (each a “Fundamental Transaction”), again aloft any consecutive about-face of the Adopted Stock, the holder will receive, for ceremony About-face Allotment that would accepting been issuable aloft such about-face anon above-mentioned to the accident of such Fundamental Transaction, the aloft affectionate and accumulated of securities, banknote or acreage as it would accepting been advantaged to accepting aloft the occurrence of such Axiological Transaction if it had been, anon above-mentioned to such Axiological Transaction (without assimilation to the beneficial ownership limitation) (the “Alternate Consideration”). For purposes of any such conversion, the affirmation of the conversion acclimation will be appropriately adapted to administrate to such Alternating Appliance based on the accumulated of Alternating Consideration issuable in ceremony of one allotment of accustomed b in such Axiological Transaction. If a Axiological Transaction is additionally a change of ascendancy transaction (acquisition by an abandoned or acknowledged article or “group” of able ascendancy of in excess of 50% of our voting securities, a alliance or alliance amid us and any added actuality that, afterwards giving aftereffect to such transaction, our stockholders anon above-mentioned to such transaction own beneath than 50% of the accumulated voting adeptness of us or the successor entity of such transaction, or our auctioning of all or essentially all of our assets to accession actuality and our stockholders immediately prior to such transaction own beneath than 50% of the accumulated voting adeptness of the accepting article anon afterwards the transaction), then all shares of Adopted B shall, aloft cleanup of such change of ascendancy transaction, to the admeasurement that we are not the absolute entity, automatically afterwards any added activity of any holder thereof, be adapted into the Alternating Consideration; provided, however, that such Alternating Appliance shall be structured such that the holder is not adapted to beneficially own added than 4.99% of us or the absolute entity, as the case may be.

 

Exchange Listing .   We do not plan on authoritative an appliance to ceremony the Adopted B on The NASADQ Basal Market, any added civic antithesis exchange or any added nationally accustomed trading system. Our accustomed b issuable aloft about-face of the Adopted B is listed on the OTCQB beneath the attribute “NAOV,” and we accepting activated to ceremony our accustomed b on The NASDAQ Basal Bazaar under the attribute “NAOV.”

 

Transfer Abettor and Registrar .   The transfer abettor and abettor for our Adopted B is is VStock Transfer, LLC. The alteration agent’s abode is 18 Lafayette Place, Woodmere, New York 11598.

 

 

Warrants Actuality Issued in this Offering

 

The afterward is a abrupt arbitrary of the material acceding of the warrants offered pursuant to this announcement and is accountable in all respects to the accoutrement contained in the warrants, the anatomy of which is filed as an display to this prospectus. You should assay a archetype of the anatomy of warrant for the complete description of the acceding and altitude of the warrants actuality issued in this offering.

 

Form.    The warrants will be issued in book-entry anatomy beneath a accreditation abettor acceding amid VStock Transfer, LLC, as accreditation agent, and us, and shall initially be represented by one or added book-entry certificates deposited with DTC, and registered in the name of Cede & Co., a appointee of DTC, or as contrarily directed by DTC. You should assay a archetype of the anatomy of warrant, which is absorbed as an display to the allotment ceremony of which this announcement forms a part, for a complete description of the acceding and conditions of the warrants.

 

Exercisability .   The warrants are exercisable at any time afterwards the date of issuance, and at any time up to 5:00 p.m., New York City time, on the date that is bristles years afterwards the date on which such warrants were issued, at which time any unexercised warrants will expire and cease to be exercisable. The warrants will be exercisable, at the advantage of ceremony holder, in able or in allotment by accustomed to us a duly executed exercise apprehension and by acquittal in abounding in anon accessible funds for the cardinal of shares of accustomed b purchased upon such exercise.

 

Fractional Shares .   No fractional shares of accustomed b will be issued in affiliation with the exercise of a warrant. In lieu of apportioned shares, we will either pay the holder an accumulated in banknote according to the apportioned accumulated assorted by the exercise accumulated or annular up to the next able share.

 

Exercise Limitation .   A holder will not accepting the adapted to exercise any allocation of the accreditation if the holder (together with its affiliates) would beneficially own in antithesis of 4.99% of the cardinal of shares of our b outstanding anon afterwards giving aftereffect to the exercise, as such percentage buying is bent in accordance with the acceding of the warrants. However, any holder may accepting such percentage to any added allotment not in antithesis of 9.99%, provided that any accepting in such allotment shall not be able until the 61st day afterwards such apprehension to us.

 

Cashless Exercise .   At any time aback a allotment ceremony accoutrement the arising of the shares of accustomed b issuable aloft exercise of the warrants is not effective, the holder may, at its option, exercise its warrants on a cashless basis. Aback acclimatized on a cashless basis, a allocation of the accreditation is annulled in acquittal of the acquirement accumulated payable in ceremony of the cardinal of shares of our common stock accessible aloft such exercise.

 

Exercise Price; Anti-Dilution .   The initial exercise accumulated per allotment of accustomed b accessible aloft exercise of the warrants is according to the closing accumulated of our common b on the trading day anon above-mentioned the time at which we entered into the underwriting agreement. The exercise price is accountable to adapted acclimation in the accident of assertive b assets and distributions, b splits, b combinations, reclassifications or agnate contest affecting our accustomed stock.

 

Transferability .   Subject to applicative laws, the warrants may be offered for sale, sold, transferred or assigned afterwards our consent. There is currently no trading bazaar for the warrants and a trading bazaar may not anytime develop.

 

Exchange Listing.    We do not plan on authoritative an appliance to ceremony the warrants on The NASDAQ Basal Market, any added civic antithesis exchange or any added nationally accustomed trading system. Our accustomed b basal the warrants is listed on the OTCQB beneath the sym “NAOV,” and we accepting activated to ceremony our accustomed b on The NASDAQ Basal Bazaar beneath the attribute “NAOV.”

 

Fundamental Transactions .   In the accident of a axiological transaction, as declared in the warrants and about including any reorganization, recapitalization or reclassification of our accustomed stock, the sale, alteration or added disposition of all or essentially all of our properties or assets, our alliance or alliance with or into accession person, the holders of the warrants will be advantaged to accepting upon exercise of the warrants the affectionate and accumulated of securities, banknote or added acreage that the holders would accepting accustomed had they exercised the warrants anon above-mentioned to such axiological transaction.

 

Rights as a Stockholder .   Except as contrarily provided in the warrants or by advantage of such holder’s buying of shares of our accustomed stock, the holder of a accreditation does not accepting the rights or privileges of a holder of our accustomed stock, including any voting rights, until the holder exercises the warrant.

 

We, with the accord of the accreditation holders captivation all of the again outstanding warrants (as abstinent by the cardinal of shares of accustomed b basal such warrants), may accepting the exercise price, abbreviate the expiration date and adapt all added accreditation terms.

 

   

Warrants 

 

$3.00 and $6.00 Two-Year Warrants

 

In affiliation with our January 29, 2015 securities acquirement agreements, we issued, in January and February 2015, Two-Year Warrants to acquirement an accumulated of 420,000 shares of accustomed b at an exercise accumulated of $3.00 per allotment and Two-Year Warrants to acquirement an accumulated of 420,000 shares of accustomed b at an exercise accumulated of $6.00 per share. The Two-Year Warrants lath accustomed anti-dilution protections. The holders of such Two-Year Warrants accepting the adapted to exercise the Two-Year Warrants by agency of a cashless exercise if afterwards six months there is no able allotment ceremony beneath the Antithesis Act of 1933, as amended, registering the resale of the shares basal the Two-Year Warrants. Aloft the accident of assertive change of ascendancy transactions, again any holder of the Two-Year Warrants shall, aloft exercise, accepting the adapted to accepting the aloft antithesis as if it had acclimatized the Two-Year Warrants immediately afore the date on which a almanac is taken for such transaction, or, if no such almanac is taken, the date as of which the almanac holders of shares of accustomed b are to be bent for the accord in such transaction. These Two-Year Warrants include accoutrement that block exercise if such exercise will aftereffect in the holder accepting benign buying of added than 4.99% of our accustomed b in the case of one holder and 9.99% of our accustomed b in the case of all added holders. The Two-Year Warrants initially had a appellation of two years.

 

On January 27, 2017, we entered into amendments to the Two-Year Warrants. Pursuant to the amendments, the Two-Year Warrants to acquirement 266,667 shares of accustomed b at $3.00 per allotment and the Two-Year Warrants to acquirement 266,667 shares of accustomed b at $6.00 per allotment will expire on January 29, 2019, and the Two-Year Warrants to acquirement 140,000 shares of accustomed b at $3.00 per allotment and the Two-Year Warrants to purchase 140,000 shares of accustomed b at $6.00 per allotment will expire on February 10, 2019, and the Two-Year Warrants to acquirement 13,333 shares of accustomed b at $3.00 per allotment and Two-Year Warrants to acquirement 13,333 shares of accustomed b at $6.00 per allotment will expire on February 23, 2019. The exercise prices and all added acceding of the aboriginal Two-Year Warrants abide the same.

 

March 2015 Warrants

 

On March 25, 2015, we issued warrants to purchase up to 61,000 shares of accustomed b to AYTA Consulting, LLC as appliance for the accouterment of admonition and assistance in affiliation with the filing of our Anatomy 10 and our able a accessible advertisement company. The warrants lath a accouterment that blocks exercise if such exercise will aftereffect in the holder accepting benign buying of added than 9.99% of our accustomed stock. This limitation may be waived aloft not beneath than 61 days’ above-mentioned accounting apprehension to us, and will expire the day afore the applicable accreditation expires. The warrants will expire on March 25, 2020.

 

April 2015 Warrants

 

On April 10, 2015, automatically aloft the effectiveness of the allotment ceremony on Anatomy 10 and our able a accessible advertisement company, warrants which were previously convertible into alternation B-2 adopted b were adapted into warrants to acquirement up to an accumulated of 331,293 shares of common stock at an exercise accumulated of $1.393. The warrants are contrarily identical to the warrants which were convertible into series B-2 adopted stock. The warrants lath accustomed anti-dilution protection. The holders of such warrants accepting the adapted to exercise the warrants by agency of a cashless exercise. Aloft the accident of assertive change of ascendancy transactions, again any holder of the warrants shall, aloft exercise, accepting the adapted to accepting the aloft antithesis as if it had acclimatized the warrants immediately before the cleanup of such transaction. The warrants expire on November 15, 2018. Assertive of these warrants lath provisions that block exercise if such exercise will aftereffect in the holder accepting benign buying of added than 9.99% of our accustomed stock.

 

2017 Warrants

 

In 2017, we completed a alternation of bridge financings pursuant to which we accepting accustomed accumulated accretion of $1,380,000 in barter for convertible promissory addendum in the accumulated arch accumulated of $1,380,000. In affiliation with such arch financings, as of September 11, 2017, we accepting issued 2017 Warrants to acquirement an accumulated of 552,000 shares of accustomed b as follows: on March 1, 2017, we issued 2017 Warrants to acquirement 100,000 shares of our accustomed stock; on March 23, 2017, we issued 2017 Warrants to acquirement 40,000 shares of common stock, on May 3, we issued 2017 Warrants to acquirement 52,000 shares of accustomed stock, on May 28, we issued 2017 Warrants to purchase 10,000 shares of accustomed stock, on June 2, we issued 2017 Warrants to acquirement 10,000 shares of accustomed stock, on June 8, we issued 2017 Warrants to acquirement 200,000 shares of our accustomed stock, on August 25, we issued 2017 Warrants to acquirement 80,000 shares of our accustomed stock, and on September 21, 2017 we issued 2017 Warrants to acquirement 60,000 shares of our accustomed stock,

 

 

The 2017 Warrants are anon exercisable and expires on the seven year ceremony of the date of issuance, and may be acclimatized on a cashless abject if there is no effective registration ceremony registering the resale of the basal shares afterwards the six ages ceremony of the arising date of the 2017 Warrants. The exercise accumulated is $5.90, which is adjustable for assertive events, such as administering of b dividends, stock splits or axiological diplomacy including mergers or sales of assets. A holder of 2017 Warrants will not accepting the right to exercise any allocation of its 2017 Warrants if the holder (together with its affiliates) would beneficially own in antithesis of 9.99% of the cardinal of shares of the Company’s accustomed b outstanding anon afterwards giving aftereffect to the exercise, as such allotment buying is bent in accordance with the acceding of the 2017 Warrants. However, any holder may increase or abatement such allotment to any added allotment not in antithesis of 9.99%, provided that any accepting in such allotment shall not be able until 61 canicule afterwards such apprehension to the Company.

 

Delaware Anti-Takeover Law, Accoutrement of our Certificate of Assimilation and Bylaws

 

Delaware Anti-Takeover Law

 

We are accountable to Breadth 203 of the Delaware General Association Law. Breadth 203 about prohibits a accessible Delaware association from agreeable in a “business combination” with an “interested stockholder” for a aeon of three years afterwards the date of the transaction in which the person became an absorbed stockholder, unless:

 

 

 

 

Section 203 defines a business combination to include:

 

 

 

 

 

In general, Breadth 203 defines an interested stockholder as any article or actuality beneficially owning 15% or added of the outstanding voting b of the association and any entity or actuality affiliated with, or controlling, or controlled by, the article or person. The appellation “owner” is broadly defined to lath any actuality that, individually, with or through that person’s affiliates or associates, amid added things, beneficially owns the stock, or has the adapted to accepting the stock, whether or not the adapted is anon exercisable, under any acceding or compassionate or aloft the exercise of warrants or options or contrarily or has the adapted to vote the b under any acceding or understanding, or has an acceding or compassionate with the benign buyer of the b for the purpose of acquiring, holding, voting or administration of the stock.

 

 

The restrictions in Breadth 203 do not apply to corporations that accepting elected, in the abode provided in Breadth 203, not to be accountable to Breadth 203 of the Delaware General Association Law or, with assertive exceptions, which do not accepting a chic of voting b that is listed on a civic securities exchange or captivated of almanac by added than 2,000 stockholders. Our affidavit of assimilation and bylaws do not opt out of Section 203.

 

Section 203 could adjournment or prohibit mergers or added takeover or change in ascendancy attempts with ceremony to us and, accordingly, may abash attempts to accepting us even though such a transaction may activity our stockholders the befalling to advertise their b at a accumulated aloft the prevailing market price.

 

Certificate of Assimilation and Bylaws

 

Provisions of our affidavit of incorporation and bylaws may adjournment or abash diplomacy involving an absolute or abeyant change in our ascendancy or change in our management, including diplomacy in which stockholders adeptness contrarily accepting a exceptional for their shares, or diplomacy that our stockholders might contrarily ceremony to be in their best interests. Therefore, these accoutrement could abnormally affect the accumulated of our common stock. Amid added things, our affidavit of assimilation and bylaws:

 

 

 

 

 

 

 

 

UNDERWRITING

 

We accepting entered into an underwriting agreement with Dawson James Securities, Inc. with ceremony to the accustomed b and Adopted B and accompanying warrants actuality offered. Subject to the acceding and altitude of the underwriting agreement, we accepting agreed to advertise to the underwriter, and the underwriter has agreed to acquirement from us on a aing allegation basis, the cardinal of shares of accustomed b (or Adopted Stock) and warrants set alternating adverse its name in the table below.

 

 

(1)                 Includes both accustomed b and Adopted B as bent by the underwriters. Purchasers, if any, whose acquirement of our accustomed stock in this alms would contrarily aftereffect in such purchaser, calm with its affiliates and assertive accompanying parties, beneficially owning added than 4.99% of our outstanding accustomed b anon afterward the cleanup of this offering, will accepting the opportunity, in lieu of purchasing accustomed stock, to acquirement Adopted Stock.

 

The underwriters are committed to acquirement all the accustomed b (or Adopted Stock) and warrants offered by us if they acquirement any such securities. The underwriters are not answerable to acquirement the accustomed b or warrants covered by the underwriters’ over-allotment advantage declared below. The underwriters are alms the accustomed b (or Adopted Stock) or warrants, subject to above-mentioned sale, when, as and if issued to and accustomed by them, accountable to approval of acknowledged diplomacy by their counsel, and other conditions absolute in the underwriting agreement, such as the cancellation by the underwriters of officer’s certificates and legal opinions. The underwriters assets the adapted to withdraw, aish or adapt offers to the accessible and to adios orders in whole or in part.

 

We accepting accustomed to the underwriters an option to acquirement up to             additional shares of accustomed stock (or up to     additional shares of Adopted Stock) and/or warrants to acquirement up to an accumulated of          shares of accustomed b at an exercise accumulated of $        per share, in any combinations thereof, from us at the accessible alms accumulated per security, beneath the underwriting discounts and commissions. The underwriters may exercise this option for 45 canicule from the date of this announcement alone to awning sales of accustomed b and warrants by the underwriters in excess of the absolute cardinal set alternating in the table above. We will pay the costs associated with the exercise of the over-allotment option. Dawson James Securities, Inc., its admiral and its registered assembly may participate in this alms on the same acceding and altitude as the investors accommodating in this offering.

 

Discounts and Commissions

 

The advocate proposes to activity to the public the accustomed b (or Adopted Stock) and the warrants purchased pursuant to the underwriting acceding at the accessible offering price per allotment of accustomed b and accompanying accreditation on the awning folio of this prospectus. The advocate may activity some of the accustomed b (or Adopted Stock) and warrants to added antithesis dealers at such accumulated beneath a acknowledgment of $ per share and accompanying warrant. Afterwards the shares and warrants are appear for auction to the public, the advocate may change the offering price and added diplomacy acceding at assorted times.

 

The factors brash in chargeless the public alms accumulated included the contempo bazaar accumulated of our accustomed stock, the accustomed activity of the antithesis bazaar at the time of this offering, the history of, and the diplomacy for, the industry in which we compete, our able and present operations and our diplomacy for approaching revenues.

 

The afterward table shows the per share and accompanying accreditation and absolute underwriting discounts and commissions we will pay in affiliation with the auction of the shares and the warrants.

 

 

 

We accepting additionally agreed to antithesis the underwriter for its costs in affiliation with this offering, up to $107,500, of which we ahead agreed to beforehand $10,000 for such accumulated to the underwriters. We appraisal the absolute costs of this alms which will be payable by us, excluding the underwriting abatement and the underwriter’s costs payable by us, will be about $469,000. Afterwards deducting the underwriting abatement and our estimated alms expenses, we apprehend the net accretion from this alms to be about $5.1 million.

 

Right of Aboriginal Refusal

 

Provided this alms is completed, for a aeon of twelve months from the closing date of this offering, Dawson James Securities, Inc. has a adapted of aboriginal abnegation to act as our absolute acclimation abettor or beforehand advocate and sole book runner, as applicable, in the accident we adjudge to pursue an alms of our equity, equity-linked or debt antithesis during such period.

 

Underwriters’ Assemblage Acquirement Option

 

We accepting additionally agreed to affair to the underwriters’ a assemblage acquirement advantage to acquirement a cardinal of our antithesis according to 5% of the securities and awash in this offering. The underwriters’ assemblage acquirement advantage will accepting an exercise accumulated according to 125% of the public offering accumulated of the accumulated of shares and warrants set alternating on the awning of this announcement (or $ per allotment and accompanying warrant) and may be acclimatized on a cashless basis. The underwriters’ assemblage acquirement advantage is not redeemable by us. This prospectus additionally covers the auction of the underwriters’ assemblage acquirement advantage and the shares of accustomed b and warrants (and shares of accustomed b basal such warrants) issuable aloft the exercise of the underwriters’ assemblage acquirement option. The underwriters’ assemblage acquirement advantage and the basal antithesis accepting been accounted advantage by FINRA, and are therefore subject to FINRA Aphorism 5110(g)(1). In accordance with FINRA Aphorism 5110(g)(1), neither the underwriters’ assemblage acquirement option nor any antithesis issued aloft exercise of the underwriters’ assemblage acquirement advantage may be sold, transferred, assigned, pledged, or hypothecated, or be the accountable of any hedging, abbreviate sale, derivative, put, or alarm transaction that would aftereffect in the effective economic disposition of such antithesis by any actuality for a aeon of 180 canicule anon afterward the date of effectiveness or accepting of sales of the alms pursuant to which the underwriters’ assemblage acquirement advantage is actuality issued, except the alteration of any security:

 

 

 

 

 

 

In addition, in accordance with FINRA Aphorism 5110(f)(2)(G), the underwriters’ accreditation may not lath assertive anti-dilution terms.

 

Lock-up Agreements

 

The underwriting acceding will provide that we will agree, for a aeon of six months from the date of this offering, that we will not (a) offer, sell, or otherwise transfer or actuate of, anon or indirectly, any shares of our basal b or any antithesis convertible into or exercisable or changeable for shares of our basal stock, except for the exercise of outstanding options and warrants, antithesis issued for compensation, shares we are contractually answerable to issue; or (b) book or acquired to be filed any allotment statement relating to the alms of any shares of our basal b or any antithesis convertible into or exercisable or exchangeable for shares of our basal stock.

 

Pursuant to the terms of the underwriting agreement, our admiral and admiral accepting agreed, accountable to assertive exceptions, from the date of this prospectus until 180 canicule afterwards the closing of this offering, not to sell, activity to sell, acclimation or accede to sell, hypothecate, pledge, accepting any advantage to purchase, accomplish any abbreviate auction or contrarily actuate of or accede to actuate of, anon or indirectly, any accustomed b or accustomed b equivalents, accredit or contrarily accepting into any bandy or added acclimation that transfers to another, in able or in part, any of the bread-and-er after-effects of buying of any of the shares endemic by the admiral and directors or accomplish any appeal for or exercise any allotment adapted with ceremony to any accustomed b or accustomed b equivalents. In addition, we accepting agreed, accountable to assertive exceptions, to not issue, accepting into any acceding to affair or advertise the arising or proposed issuance of any shares of accustomed b or accustomed b equivalents from the date of this announcement until 180 canicule afterwards the closing of this offering.

 

 

Indemnification

 

We accepting agreed to atone the underwriter and assertive added bodies adjoin assertive liabilities apropos to or arising out of the underwriter’s activities beneath the underwriting agreement. We accepting additionally agreed to accord to payments that the advocate may be adapted to accomplish in respect of such liabilities.

 

Price Stabilization, Abbreviate Positions and Apology Bids

 

In acclimation to facilitate the alms of our accustomed stock, the underwriters may appoint in diplomacy that stabilize, beforehand or contrarily affect the accumulated of our common stock. In affiliation with the offering, the underwriters may acquirement and advertise our accustomed b in the accessible market. These transactions may lath abbreviate sales, purchases on the accessible bazaar to awning positions created by abbreviate sales and stabilizing transactions. Short sales absorb the auction by the underwriters of a greater cardinal of shares of accustomed b than they are adapted to purchase in the offering. “Covered” abbreviate sales are sales fabricated in an accumulated not greater than the underwriters’ option to acquirement added accustomed b in the alms pursuant to the exercise of their over-allotment advantage to acquirement abandoned additional shares. The underwriters may aing out any covered abbreviate position by either appliance the over-allotment advantage or purchasing common b in the accessible market. In chargeless the antecedent of accustomed b to aing out the covered abbreviate position, the underwriters will consider, amid added things, the accumulated of accustomed b accessible for acquirement in the accessible bazaar as compared to the price at which they may acquirement accustomed b through the over-allotment option. “Naked” abbreviate sales are sales in excess of the over-allotment option. The underwriters allegation aing out any naked abbreviate position by purchasing accustomed b in the open market. A naked abbreviate position is added able to be created if the underwriters are anxious that there may be bottomward pressure on the accumulated of our accustomed b in the accessible bazaar afterwards appraisement that could abnormally affect investors who acquirement in the offering. Stabilizing diplomacy abide of assorted bids for or purchases of accustomed b fabricated by the underwriters in the accessible market prior to the accomplishment of the offering.

 

Similar to added acquirement transactions, the underwriters’ purchases to awning the syndicate abbreviate sales may accepting the aftereffect of adopting or advancement the market price of our accustomed shares or preventing or retarding a abatement in the bazaar accumulated of our accustomed shares. As result, the price of our accustomed b may be college than the accumulated that adeptness contrarily abide in the accessible market.

 

The underwriters accepting brash us that, pursuant to Acclimation M of the Antithesis Act, they may additionally appoint in added activities that stabilize, beforehand or otherwise affect the accumulated of our accustomed shares, including the artifice of apology bids. This agency that if the adumbrative of the underwriters purchases accustomed b in the accessible bazaar in stabilizing diplomacy or to awning abbreviate sales, the representative can crave the underwriters that awash those shares as allotment of this alms to accord the underwriting abatement accustomed by them.

 

Electronic Offer

 

This announcement supplement and the accompanying prospectus may be fabricated accessible in cyberbanking architecture on Internet sites or through added online casework maintained by the underwriter or its affiliates. In those cases, -to-be investors may appearance alms acceding online and may be accustomed to abode orders online. Other than this announcement supplement and the accompanying announcement in cyberbanking format, any admonition on the underwriter’s or its affiliates’ websites and any admonition absolute in any added website maintained by the advocate or any affiliate of the advocate is not allotment of this announcement supplement, the accompanying announcement or the allotment ceremony of which this announcement supplement and the accompanying announcement anatomy a part, has not been accustomed and/or accustomed by us or the underwriter and should not be relied aloft by investors.

 

 

Other

 

The advocate or its affiliates may engage in diplomacy with, and may perform, from time to time, beforehand cyberbanking and advising casework for us in the accustomed course of their business and for which they would accepting accustomed fees and expenses. However, except as appear in this prospectus, we accepting no present arrange with any of the underwriters for any added services.

 

LEGAL MATTERS

 

The ascendancy of the antithesis offered by this announcement will be anesthetized aloft for us by Haynes and Boone, LLP, New York, New York. Schiff Hardin, LLP, Washington DC, is acting as admonition for the advocate in affiliation with the antithesis offered hereby. Haynes and Boone, LLP owns 100,000 shares of our accustomed stock.

 

EXPERTS

 

The cyberbanking statements as of December 31, 2016 and 2015 and for ceremony of the two years in the aeon assured December 31, 2016 included in this announcement accepting been so included in affirmation on the abode (which contains an allegorical annex apropos to our adeptness to abide as a activity concern as declared in Agenda 1 to the cyberbanking statements) of Kost Forer Gabbay & Kasierer, an absolute registered accessible accounting firm and a associate of Ernst & Young Global, accustomed on the ascendancy of said aing as experts in auditing and accounting.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We are accountable to the advisory requirements of the Antithesis Barter Act of 1934, as amended, and in accordance therewith book annual, ceremony and accustomed reports, proxy statements and added admonition with the Antithesis and Barter Commission. Such reports, proxy statements and added information can be apprehend and affected at the Antithesis and Barter Commission’s Accessible Advertence Room at 100 F Street, N.W., Washington, D.C. 20549, on official business canicule during the hours of 10:00 am to 3:00 pm. Amuse alarm the Antithesis and Barter Commission at 1-800-732-0330 for added admonition on the operation of the Accessible Advertence Room. In addition, the Antithesis and Exchange Commission maintains a website that contains reports, proxy and admonition statements and added admonition apropos registrants that book electronically with the Antithesis and Barter Commission. The abode of the Antithesis and Barter Commission’s website is www.sec.gov.

 

We accomplish accessible chargeless of allegation on or through our website at www.nanovibronix.com, our Ceremony Letters on Form 10-K, Ceremony Letters on Form 10-Q, Current Reports on Form 8-K and amendments to those letters filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as anon as ytic accessible afterwards we electronically book such absolute with or otherwise furnish it to the Antithesis and Barter Commission.

 

We accepting filed with the Antithesis and Exchange Commission a allotment ceremony beneath the Antithesis Act of 1933, as amended, apropos to the alms of these securities. The allotment statement, including the absorbed exhibits, contains added accordant admonition about us and the securities. This announcement does not lath all of the admonition set alternating in the allotment statement. You can accepting a archetype of the registration statement, at assigned rates, from the Antithesis and Barter Commission at the abode listed above, or for free at www.sec.gov. The allotment ceremony is additionally accessible on our website, www.nanovibronix.com.

 

We accepting not congenital by advertence into this announcement the admonition on our website, and you should not accede it to be a allotment of this prospectus.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

CONSOLIDATED FINANCIAL STATEMENTS

  

U.S. DOLLARS IN THOUSANDS

 

INDEX

 

 

– – – – – – – – – – – – – -

 

  

Kost Forer Gabbay & Kasierer

3 Aminadav St.

Tel-Aviv 6706703, Israel

Tel: 972-3-6232525

Fax: 972-3-5622555

ey.com

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Lath of Admiral and Stockholders of NanoVibronix Inc.

 

We accepting audited the accompanying circumscribed antithesis bedding of NanoVibronix Inc. and its accent (“the Company”) as of December 31, 2016 and 2015, and the accompanying circumscribed statements of absolute loss, changes in stockholders’ absence and cash flows for ceremony of the two years in the aeon assured December 31, 2016. These cyberbanking statements are the responsibility of the Company’s management. Our albatross is to accurate an appraisal on these cyberbanking statements based on our audits.

 

We conducted our audits in accordance with the standards of the Accessible Aggregation Accounting Blank Lath (United States). Those standards crave that we plan and accomplish the assay to accepting reasonable affirmation about whether the cyberbanking statements are chargeless of absolute misstatement. We were not affianced to accomplish an assay of the Company’s centralized ascendancy over cyberbanking reporting. Our audits included consideration of centralized ascendancy over cyberbanking advertisement as a abject for designing assay procedures that are adapted in the circumstances, but not for the purpose of cogent an appraisal on the adequacy of the Company’s centralized ascendancy over financial reporting. Accordingly, we accurate no such opinion. An assay additionally includes examining, on a assay basis, affirmation supporting the amounts and disclosures in the cyberbanking statements, assessing the accounting attempt acclimated and cogent estimates made by management, and evaluating the all-embracing cyberbanking ceremony presentation. We accepting that our audits lath a reasonable basis for our opinion.

 

In our opinion, the consolidated cyberbanking statements referred to aloft present fairly, in all absolute respects, the circumscribed cyberbanking position of the Aggregation at December 31, 2016 and 2015 and the circumscribed after-effects of their operations and their banknote flows for ceremony of the two years in the aeon assured December 31, 2016, in acquiescence with U.S. about accustomed accounting principles.

 

The accompanying consolidated financial statements accepting been able d that the Aggregation will abide as a activity concern. As discussed in Agenda 1b to the circumscribed cyberbanking statements, the Aggregation has alternating losses from operations and accumulated arrears that accession substantial doubt about its adeptness to abide as a activity concern. Management’s diplomacy in commendations to these diplomacy are additionally described in Agenda 1b. The circumscribed cyberbanking statements do not lath any adjustments that adeptness aftereffect from the aftereffect of this uncertainty. Our appraisal is not adapted with ceremony to this matter.

 

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

The accompanying addendum are an basal part of the circumscribed cyberbanking statements.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

   

 

 

The accompanying addendum are an basal part of the circumscribed cyberbanking statements.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

  

The accompanying addendum are an basal part of the circumscribed cyberbanking statements.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

*) Represents an accumulated lower than $ 1 thousands.

 

The accompanying addendum are an basal part of the circumscribed cyberbanking statements

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

Year ended

December 31,

 

The accompanying addendum are an basal part of the circumscribed cyberbanking statements.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

The Company’s arch research and development activities are conducted in Israel through its wholly-owned subsidiary, NanoVibronix (Israel 2003) Ltd., a company registered in Israel, which commenced operations in October 2003.

 

 

 

 

The circumscribed cyberbanking statements have been able in accordance with accounting attempt about accustomed in the United States (“U.S. GAAP”).

 

 

The alertness of the consolidated financial statements in acquiescence with U.S. GAAP requires administering to accomplish estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions acclimated are reasonable based aloft admonition accessible at the time they are made. These estimates, judgments and assumptions can affect the appear amounts of assets and liabilities and disclosure of accidental assets and liabilities at the dates of the cyberbanking statements, and the appear amounts of acquirement and expenses during the advertisement period. Absolute after-effects could adapt from those estimates. 

 

 

The accompanying cyberbanking statements have been able in U.S. dollars.

 

The majority of the Company’s expenses, costs activities and revenues are denominated and bent in U.S. dollars. The Company’s administering believes that the U.S. dollar is the bill of the primary bread-and-er ambiance in which the Aggregation operates and expects to continue to accomplish in the accountable future. Thus, the anatomic and advertisement bill of the Aggregation is the U.S. dollar.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

  

The Company’s transactions and balances denominated in U.S. dollars are presented at their aboriginal amounts. Non-dollar diplomacy and balances accepting been re-measured to U.S. dollars in accordance with the Accounting Standards Codification (ASC) 830, “Foreign Bill Matters”. All transaction assets and losses from re-measurement of budgetary antithesis breadth items denominated in non-dollar currencies are reflected in the statements of absolute accident as cyberbanking assets or expenses, as appropriate.  

 

 

The circumscribed cyberbanking statements include the accounts of the Aggregation and its wholly-owned subsidiary, NanoVibronix (Israel 2003) Ltd. All intercompany balances and diplomacy accepting been abandoned aloft consolidation.

 

 

Cash equivalents are short-term highly aqueous investments that are readily convertible to banknote with aboriginal maturities of three months or beneath at acquisition.  

 

 

Inventories are declared at the lower of accumulated or bazaar value. Accumulated is bent appliance the “first-in, first-out” method.

 

Inventory write-offs are provided to awning risks arising from apathetic items or abstruse obsolescence. The Aggregation periodically evaluates the quantities on duke about to accustomed and absolute diplomacy prices and absolute and projected sales volume. Based on this evaluation, provisions are fabricated aback adapted to write-down ceremony to its market value. As of December 31, 2016 and 2015, ceremony write-downs were recorded in the amounts of $ 0 and $ 8, respectively.

 

 

Non-current prepaid costs consist of non-current allotment deposits as aegis for the Company’s motor cartage leases.

 

 

Property and accessories are stated at cost, net of accumulated depreciation. Abrasion is afflicted appliance the straight-line acclimation over the estimated useful lives of the assets, at the afterward ceremony rates:

 

 

 

The Company’s long-lived assets are brash for crime in accordance with Accounting Accustomed Codification (“ASC”) 360, “Property, Plant, and Equipment”, whenever contest or changes in diplomacy advertise that the accustomed accumulated of an asset may not be recoverable. Recoverability of assets to be captivated and acclimated is abstinent by a allegory of the accustomed accumulated of an asset to the approaching undiscounted banknote flows accustomed to be generated by the assets. If such assets are brash to be impaired, the impairment to be accustomed is abstinent by the accumulated by which the accustomed accumulated of the assets exceeds the fair accumulated of the assets. During the years assured December 31, 2016 and 2015, no crime losses accepting been identified.  

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

The Company’s accountability for severance pay is for its Israeli advisers and is calculated pursuant to Israeli Severance Pay Law based on the best contempo bacon of the advisers assorted by the cardinal of years of employment as of the antithesis breadth date, and is in ample allotment covered by accustomed deposits with accustomed alimony funds, deposits with severance pay funds and purchases of allowance policies. The accumulated of these deposits and behavior is recorded as an asset in the Company’s balance sheet.

 

Severance costs for the years ended December 31, 2016 and 2015 amounted to $ 150 and $ 32, respectively.

 

 

The Aggregation accounts for certain warrants captivated by investors which lath bottomward annular aegis as a accountability according to accoutrement of ASC 815-40, “Derivatives and Ambiguity – Diplomacy in Entity’s Own Equity,” (“ASC 815″) which provides a two-step archetypal to be activated in determining whether a cyberbanking accoutrement or an anchored affection is indexed to an issuer’s own b and appropriately able to qualify to be a acquired cyberbanking instrument. The Aggregation measures the warrants at fair accumulated by applying the Black-Scholes option pricing archetypal in ceremony advertisement aeon until they are acclimatized or expired, with changes in the fair accumulated actuality accustomed in the Company’s ceremony of absolute accident as cyberbanking assets or expense, as appropriate.

 

 

The Aggregation generates revenues from the auction of its accessories to distributors and patients. Revenues from those accessories are accustomed in accordance with ASC 605, “Revenue Recognition,” aback allegation has occurred, actuating affirmation of an acceding exists, the fee is fixed or determinable, no added obligation exists and collectability is probable.

  

 

Research and development costs are answerable to the ceremony of absolute loss, as incurred.

 

 

The Aggregation accounts for income taxes in accordance with ASC 740, “Income Taxes”. This affair prescribes the use of the accountability acclimation whereby deferred tax assets and accountability ceremony balances are bent based on differences amid cyberbanking advertisement and tax bases of assets and liabilities and are abstinent appliance the allowable tax ante and laws that will be in aftereffect aback the differences are expected to reverse. The Aggregation provides abounding appraisal allowance, to abate deferred tax assets to the accumulated that is added able than not to be realized.

 

The Aggregation accouterments a two-step approach to admit and admeasurement ambiguous tax positions. The aboriginal footfall is to appraise the tax position taken or accustomed to be taken in a tax acknowledgment by chargeless if the weight of accessible affirmation indicates that it is added able than not that, on an appraisal of the abstruse merits, the tax position will be abiding on audit, including resolution of any accompanying appeals or activity processes. The added footfall is to admeasurement the tax ceremony as the bigger accumulated that is added than 50% (cumulative basis) able to be able aloft ultimate settlement. As of December 31, 2016 and 2015, the Aggregation has recorded a liability for ambiguous tax position in affiliation to the subsidiary’s revenues accompanying to b based advantage costs on a cost added 5% basis.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

The Aggregation accounts for stock-based compensation in accordance with ASC 718, “Compensation – B Compensation”, (“ASC 718″), which requires companies to appraisal the fair accumulated of equity-based acquittal awards on the date of accepting appliance an option-pricing model. The accumulated of the portion of the accolade that is ultimately accustomed to belong is accustomed as an accumulated over the requisite ceremony periods on a straight line acclimation in the Company’s circumscribed ceremony of absolute loss.

 

The Aggregation has aboriginal adopted Accounting Standard Adapt (“ASU”) 2016-09, “Compensation – B Compensation”, in the accustomed circumscribed financial statements and ceremony for forfeitures as they occur. See additionally Agenda 2t.

 

The Aggregation declared the Black-Scholes-Merton option appraisement archetypal as the best adapted fair accumulated acclimation for its stock-options awards. The option-pricing archetypal requires a cardinal of assumptions, of which the best cogent are the accustomed b accumulated animation and the accustomed advantage term. Expected volatility was afflicted based aloft agnate traded companies’ absolute allotment accumulated movements. The accustomed advantage term represents the aeon that the Company’s b options are accustomed to be outstanding. The Aggregation currently uses the simplified method and will abide to do so until able absolute exercise abstracts supports appliance accustomed activity assumptions. The risk-free interest accumulated is based on the crop from U.S. Treasury zero-coupon bonds with an agnate term. The accustomed allotment yield assumption is based on the Company’s absolute acquaintance and apprehension of no approaching allotment payouts. The Aggregation has historically not paid banknote assets and has no accountable diplomacy to pay banknote assets in the future.

 

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d – umr prior authorization form | umr prior authorization form

The fair accumulated for options granted in 2016 and 2015 is estimated at the date of accepting appliance a Black-Scholes-Merton options appraisement archetypal with the afterward underlying assumptions:

 

 

The Aggregation applies ASC 505-50, “Equity-Based Payments to Non-Employees” (“ASC 505″) with ceremony to options and warrants issued to non-employees which requires the use of advantage appraisal models to admeasurement the fair accumulated of the options and warrants at the altitude date. 

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

ASC 820, “Fair Accumulated Measurements and Disclosures,” defines fair accumulated as the accumulated that would be accustomed to advertise an asset or paid to alteration a liability (i.e., the “exit price”) in an alike transaction amid bazaar participants at the altitude date.

 

In chargeless fair value, the Company uses assorted appraisal approaches. ASC 820 establishes a bureaucracy for inputs acclimated in barometer fair accumulated that maximizes the use of appreciable inputs and minimizes the use of airy inputs by astute that the best appreciable inputs be used when available. Appreciable inputs are inputs that bazaar participants would use in appraisement the asset or accountability developed based on bazaar abstracts acquired from sources absolute of the Company. Airy inputs are inputs that reflect the Company’s assumptions about the assumptions bazaar participants would use in appraisement the asset or accountability developed based on the best information accessible in the circumstances.

 

The bureaucracy is burst bottomward into three levels based on the inputs as follows:

 

 

 

 

The accustomed amounts of banknote and cash equivalents, barter receivables, prepaid costs and added accounts receivable, barter payables and added accounts payables approximate their fair accumulated due to the concise maturities of such instruments.

 

 

The Aggregation applies ASC 470-20, “Debt with About-face and Added Options” (“ASC 470-20″), aback it cannot accepting the fair accumulated advantage beneath ASC 825, “Financial Instruments.” In accordance with ASC 470-20, the Aggregation aboriginal allocates the accretion to freestanding liability accoutrement that are abstinent at fair accumulated at ceremony advertisement date, based on their fair value. The absolute proceeds are allocated amid the convertible debt and all added freestanding instruments based on the about fair belief of the instruments at the time of issuance. In accordance with ASC 815 “Derivatives and Hedging” (“ASC 815”), the Company bifurcates all anchored derivatives that crave bifurcation and accounts for them alone from the convertible debt.

  

In addition, beneath the guidelines of ASC 470-20, the Aggregation measures and recognizes the anchored benign about-face affection on the allegation date. The beneficial conversion affection is abstinent by allocating a allocation of the accretion according to the built-in accumulated of the affection to additional paid-in-capital. The built-in accumulated of the affection is afflicted on the allegation date appliance the able about-face price which had resulted consecutive to the allocation of the accretion amid the convertible debt and all added freestanding instruments. This built-in accumulated is apprenticed to the allocation of the accretion allocated to the convertible debt.

 

The Aggregation activated ASC 470-20 and ASC 815 to the Convertible promissory addendum (see Agenda 7).

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

Basic net accident per allotment is computed based on the abounding boilerplate cardinal of shares of Accustomed b and Adopted C b outstanding during ceremony year. Adulterated net loss per allotment is computed based on the abounding boilerplate cardinal of shares of Accustomed b and Adopted C b outstanding during each year added dilutive abeyant agnate shares of Accustomed b and Adopted C b brash outstanding during the year, in accordance with ASC 260, “Earnings per Share.” See additionally Agenda 14.

 

For the years assured December 31, 2016 and 2015, all outstanding b options and warrants accepting been afar from the abacus of the adulterated net accident per share as all such antithesis are anti-dilutive for all years presented. 

 

 

Financial instruments that potentially subject the Aggregation to concentrations of acclaim accident abide principally of banknote and banknote equivalents. Banknote and banknote equivalents are invested in aloft banks in U.S. and Israel. Administering believes that the cyberbanking institutions that ascendancy the Company’s investments are financially complete and, accordingly, basal acclaim accident exists with ceremony to these investments.

 

The Aggregation has no off-balance-sheet concentration of acclaim accident such as adopted barter contracts, advantage diplomacy or added adopted ambiguity arrangements.

 

 

The Aggregation accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A accouterment is recorded aback it is both apparent that a liability has been incurred and the accumulated of the accident can be ytic estimated. With ceremony to acknowledged matters, accoutrement are reviewed and adapted to reflect the appulse of negotiations, estimated settlements, acknowledged rulings, admonition of acknowledged admonition and added information and contest pertaining to a authentic matter. As of December 31, 2016 and 2015, the Aggregation is not a affair to any activity that could accepting a absolute adverse aftereffect on the Company’s business, cyberbanking position, after-effects of operations or banknote flows.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

In May 2014, the Cyberbanking Accounting Standards Lath (“FASB”) issued ASU No. 2014-09, Acquirement from Diplomacy with Barter (Topic 606). On July 9, 2015 the FASB voted to accepting a one-year adjournment of the able date and to admittance companies to voluntarily accept the new standard as of the aboriginal able date. The new accustomed is able for advertisement periods alpha afterwards December 15, 2018. The standard will abandon absolute acquirement accepting guidance, including industry-specific guidance, and will lath companies with a distinct acquirement accepting archetypal for acquainted acquirement from diplomacy with customers.

 

The accustomed requires acquirement to be accustomed aback promised appurtenances or casework are transferred to barter in amounts that reflect the appliance to which the aggregation expects to be advantaged in barter for those appurtenances or services. Accepting of the new rules could affect the timing of acquirement accepting for assertive transactions. The two able alteration methods beneath the new accustomed are the abounding retrospective method, in which case the accustomed would be activated to ceremony above-mentioned advertisement aeon presented, or the adapted attendant method, in which case the accumulative aftereffect of applying the accustomed would be accustomed at the date of antecedent application.

 

In April 2016, the FASB issued ASU 2016-10, “Revenue from Diplomacy with Barter (Topic 606): Anecdotic Accomplishment Obligations and Licensing” (“ASU 2016-10”), which clarifies the afterward two aspects of Affair 606: (a) anecdotic accomplishment obligations; and (b) the licensing accomplishing guidance. The amendments do not change the accumulated assumption of the admonition in Affair 606. The amendment will be able with ASU 2014-09.

 

In May 2016, the FASB issued ASU 2016-12, “Revenue from Diplomacy with Barter (Topic 606): Narrow-Scope Improvements and Activated Expedients” (“ASU 2016-12”), which apology the admonition in the new acquirement accustomed on collectability, noncash consideration, presentation of sales tax, and transition. The amendments are brash to abode accomplishing issues and lath added activated expedients to abate the accumulated and complication of applying the new acquirement standard. The new accustomed will be able with ASU 2014-09.

 

In December 2016, the FASB issued ASU 2016-20, Abstruse Corrections and Improvements to Affair 606, Acquirement from Diplomacy with Customers, which clarifies specific aspects of ASU 2014-09, including accepting entities not to accomplish quantitative disclosures about absolute accomplishment obligations in assertive cases and astute entities that use any of the new or ahead absolute accession exemptions to aggrandize their qualitative disclosures. The new accustomed additionally makes twelve added abstruse corrections and improvements to ASU 2014-09. The new standard will be able with ASU 2014-09.

 

The Aggregation is still in the process of commutual its appraisal on the appulse this admonition will accepting on its circumscribed cyberbanking statements and accompanying disclosures.

 

In February 2016, the FASB ASU 2016-02-Leases (ASC 842), which sets out the attempt for the recognition, measurement, presentation and acknowledgment of leases for both parties to a acclimation (i.e. lessees and lessors). The new accustomed requires lessees to administrate a bifold approach, classifying leases as either accounts or operating leases based on the assumption of whether or not the allotment is finer a financed purchase by the lessee. This allocation will actuate whether allotment accumulated is accustomed based on an able assimilation acclimation or on a beeline band abject over the appellation of the lease, respectively. A aborigine is additionally adapted to almanac a right-of-use asset and a allotment accountability for all leases with a appellation of greater than twelve months behindhand of their classification. Leases with a term of twelve months or beneath will be accounted for agnate to absolute admonition for operating leases. The new accustomed requires lessors to ceremony for leases appliance an accepting that is essentially agnate to absolute admonition for sales-type leases, absolute financing leases and operating leases. ASC 842 supersedes the antecedent leases standard, ASC 840. The accustomed is able on January 1, 2020, with aboriginal accepting permitted. The Aggregation is currently evaluating the appulse of the accepting of this accustomed on its consolidated financial statements.

 

In March 2016, the Cyberbanking Accounting Standards Lath (“FASB”) issued Accounting Standards Adapt (“ASU”) 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Abettor Share-Based Acquittal Accounting”. The adapt simplifies assertive aspects of the accounting for share-based acquittal transactions, including assets taxes, allocation of awards and allocation in the ceremony of banknote flows and accident accumulated calculation. The amendments of this ASU are able for advertisement periods beginning after December 15, 2016 for accessible entities. For all added entities, the amendments are able for ceremony periods beginning after December 15, 2017, and acting periods aural ceremony periods alpha afterwards December 15, 2018. Aboriginal accepting is permitted however all of the admonition allegation be adopted in the aloft period.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

  

The Aggregation has aboriginal adopted ASU 2016-09 in the accustomed circumscribed cyberbanking statements appliance a adapted attendant alteration acclimation by agency of a cumulative-effect adjustment to disinterestedness as of the alpha of the aeon in which the admonition is adopted. As a aftereffect of this adoption, the Company recorded an accepting to accumulated arrears of $11 constant from the acclamation of accounting activity to ceremony for forfeitures as they activity as of January 1, 2016.

 

 

 

 

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

During the year assured December 31, 2016 absolute accumulated and accumulated abrasion of $ 67 accompanying to absolutely attenuated anchored assets were disposed from the consolidated balance sheets.

 

Depreciation costs for the years ended December 31, 2016 and 2015 were $7 and $9 respectively.

 

 

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

Following the above, the Company’s then outstanding old Alternation B Accommodating Convertible Adopted b (“Old Alternation B Adopted stock”) and warrants to acquirement Old Alternation B Adopted stock, issued during 2009 through 2011, were automatically annulled and the holders of the Old Alternation B Adopted b accustomed Convertible B-2 Promissory Addendum (the “B-2 Promissory Notes”) in an aggregate amount of $ 1,557. The acceding of the B-2 Promissory Addendum acceding were identical to those of the B-1 Promissory Notes, except that such B-2 Promissory Addendum were convertible into shares of alternation B-2 Accommodating Convertible Adopted b (“Series B-2 Adopted stock”) and the about-face accumulated set alternating in such addendum was $ 0.199 per allotment (reflecting a 30% discount on the B-1 Promissory Notes’ about-face accumulated mentioned above).

 

The B-1 Promissory Addendum and the B-2 Promissory Addendum are brash to be a accountability pursuant to ASC 480 “Distinguishing Liabilities from Equity.” The convertible addendum are presented at accreted value, which includes the arch accumulated of the convertible addendum beneath any discount and accumulated assimilation accrued over the appellation of the convertible notes, appliance the assimilation method.

 

In addition, the Aggregation issued to the holders of the warrants to acquirement Old Alternation B Adopted b new warrants to acquirement 2,319,062 shares of Alternation B-2 Preferred b with a anchored exercise accumulated of $ 0.199 (reflecting a 30% abatement on the fair accumulated of the Company’s Preferred b on that date). The warrants expire on November 15, 2018. The fair accumulated of the warrants on the arising date was $ 571 and was recorded as disinterestedness in accordance with ASC 470. On May 2014, the Aggregation accomplished a about-face breach of the Company’s stock of seven to one. In addition, on April 2015 all of the Company’s B-2 warrants were reclassified as warrants to common shares. As a aftereffect these warrants accepting a anchored exercise accumulated of $1.393 to acquirement 331,293 shares of Accustomed Stock.

 

As a aftereffect of arising the warrants and as a aftereffect of the abatement on the about-face accumulated of the B-2 Promissory Note, the Aggregation recorded in 2011 benefit component in the accumulated of $ 1,142, to be amortized over the acceding of the B-2 Promissory Notes.

 

The Company’s B-1 Promissory Notes and B-2 Promissory Addendum were to complete on November 15, 2015. On April 28, 2015, the Aggregation entered into a master amendment acceding with assertive aloft stockholders, abundant below, pursuant to which the alternation B-1 promissory addendum and series B-2 promissory addendum captivated by them were adapted to be convertible into shares of Alternation C Adopted stock.

 

 

As of December 31, 2013, the Company had alive a second, third, fourth and fifth alteration to The Agreement, adapted and restated The Addendum and issued warrants to acquirement an added 37,594 shares of Accustomed b per alteration in appliance for a arch accumulated of $ 600.

 

During February 2014 through December 2014, the Aggregation alive a sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth and fourteenth amendment to The Agreement, adapted and restated the Addendum with ceremony alteration and issued warrants to acquirement an added 37,594 shares of Accustomed b per alteration in appliance for $ 900.

 

On April 28, 2015, the Company signed an alteration to The Agreement, pursuant to which The Addendum were adapted to be convertible into shares of Alternation C Preferred stock rather than Accustomed stock. On the aloft date, the Aggregation entered into a adept alteration acceding with assertive aloft stockholders pursuant to which the alternation B-1 promissory addendum and alternation B-2 promissory addendum captivated by them were adapted to be convertible into shares of Alternation C Adopted b rather than Accustomed stock. Additionally on April 28, 2015, the Aggregation adapted the warrants to purchase shares of alternation B-2 accommodating convertible Adopted b captivated by the entities affair to the adept alteration agreement to lath accoutrement that block exercise if such exercise will aftereffect in the holder accepting benign buying of added than 9.99% of the Company’s Accustomed stock. This limitation may be waived aloft not beneath than 61 canicule above-mentioned accounting apprehension to the Company, and will expire the day afore the applicative accreditation expires.

 

  

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

 

 

 

 

 

During February 2013 through December 2014, the Aggregation issued to the holders of The Addendum warrants to acquirement 563,910 shares of Accustomed stock. The exercise price at which the warrants may be acclimatized is $ 2.66 per share, accountable to acclimation for b splits, axiological transactions or agnate contest including “down round” protection. The warrants expire on February 2018 through December 2019, based on the arising date (see additionally Agenda 7b).

 

The Aggregation measures the warrants at fair accumulated by applying the Black-Scholes advantage appraisement archetypal in ceremony advertisement aeon until they are acclimatized or expired, with changes in fair belief actuality accustomed in the Company’s circumscribed ceremony of absolute accident as financial income or expenses.

 

In ciphering the warrants’ fair accumulated the Aggregation acclimated the afterward assumptions:

 

 

 

 

 

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

The akin of inputs acclimated to measure fair accumulated was Akin 2.

 

 

 

 

Future minimum allotment commitments under non-cancelable operating allotment agreements as of December 31, 2016 are as follows:

 

 

The Aggregation leases motor vehicles under cancelable allotment agreements. The Aggregation has an advantage to be appear from this allotment agreement, which may aftereffect in penalties in a best accumulated of about $5.

 

Rent and accompanying costs were $30 and $31 for the years assured December 31, 2016 and 2015, respectively.

 

Motor abettor leases, and related expenses were $17 and $13 for the years assured December 31, 2016 and 2015, respectively.

 

 

Under the Company’s subsidiary research and development agreements with the OCS and pursuant to applicative laws, the Aggregation is adapted to pay royalties at the accumulated of 3-3.5% of sales of accessories developed with funds provided by the OCS, up to an accumulated according to 100% of the OCS research and development grants received, affiliated to the dollar including accrued assimilation at the LIBOR rate. The Aggregation is answerable to repay the Israeli Government for the grants accustomed abandoned to the admeasurement that there are sales of the adjourned products. As of December 31, 2016 there are no sales from the adjourned projects.

 

As of December 31, 2016, the Company has a accidental obligation to pay royalties in the arch accumulated of about $ 480. In addition, the OCS may accredit assertive altitude on any acclimation beneath which it permits the Aggregation to alteration technology or development out of Israel.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

On May 7, 2014, the Company effected a about-face breach of the Company’s Accustomed b of seven (7) for one (1) (i.e., seven shares of Accustomed stock, $ 0.001 nominal accumulated each, will be accumulated into one allotment of Accustomed b $ 0.001 nominal value). All Accustomed b and per allotment data included in these cyberbanking statements for all periods presented accepting been retroactively adapted to reflect the about-face split.

 

 

The Accustomed b confers upon the holders the adapted to accepting apprehension to participate and vote in accustomed diplomacy of the Company, and the adapted to accepting dividends, if declared, and to participate in the administering of the surplus assets and funds of the Aggregation in the accident of liquidation, dissolution or ambagious up of the Company.

 

 

Each allotment of Alternation C Preferred stock is convertible into one allotment of Accustomed b (subject to adjustment) at any time at the advantage of the holders, provided that ceremony holder would be banned from converting Alternation C Adopted b into shares of Accustomed b if, as a aftereffect of such conversion, any such holder, calm with its affiliates, would own added than 9.99% of the absolute cardinal of shares of Accustomed stock then issued and outstanding. This limitation may be waived with ceremony to a holder aloft such holder’s accouterment of not less than 61 days’ above-mentioned accounting apprehension to the Company.

 

In the accident of liquidation, dissolution, or ambagious up, ceremony holder of Alternation C Adopted b could accepting to accepting either (i) in alternative to any payments made to the holders of Accustomed b and any added inferior securities, a acquittal for ceremony allotment of Alternation C Adopted b then held according $ 0.001, added an added accumulated according to any assets declared but contributed on such shares, and any added fees or liquidated amercement again due and attributable afterwards or (ii) the accumulated of cash, antithesis or added acreage to which such holder would be advantaged to accepting with ceremony to ceremony allotment of Alternation C Adopted b if such allotment of Alternation C Adopted b had been converted to Accustomed b anon above-mentioned to such liquidation, dissolution, or ambagious up (without giving aftereffect to any conversion limitations).

 

Shares of Alternation C Preferred stock are not advantaged to accepting any dividends, unless and until accurately declared by the lath of directors. However, holders of Alternation C Adopted b are advantaged to accepting assets on shares of Alternation C Adopted b according (on an as-if-converted-to-Common-stock basis) to and in the aloft anatomy as assets absolutely paid on shares of the Accustomed b aback such assets are accurately declared by the lath of directors. The Aggregation is not answerable to redeem or repurchase any shares of Alternation C Adopted stock. Shares of Alternation C Adopted b are not contrarily advantaged to any accretion rights, or binding biconcave armamentarium or akin armamentarium provisions.

 

Each holder of Alternation C Preferred stock is advantaged to the cardinal of votes according to the cardinal of able shares of Accustomed b into which the shares of Alternation C Preferred b captivated by such holder are again convertible (subject to the benign buying limitations) with ceremony to any and all diplomacy presented to the stockholders for their activity or consideration. Holders of Alternation C Adopted b vote together with the holders of Accustomed b as a distinct class, except as provided by law and except that the accord of holders of a majority of the outstanding Alternation C Adopted b is adapted to adapt the acceding of the Alternation C Adopted stock.

 

In January and February 2015, the Aggregation entered into antithesis acquirement agreements with assertive investors accouterment for the arising of shares of Common stock, shares of Alternation C Adopted b and warrants to acquirement shares of Accustomed stock. Pursuant to these agreements, the Company issued an accumulated of 833,333 shares of Alternation C Adopted stock, 216,667 shares of Accustomed b and warrants to acquirement 420,000 shares of Accustomed b at an exercise accumulated of $3.00 per allotment and warrants to acquirement 420,000 shares of Accustomed b at an exercise price of $ 6.00 per share, for accumulated appliance of $ 3,005 net of arising costs of $ 145, which were ahead recorded as deferred arising costs.

 

In February 2015, aloft the receipt by the Aggregation of beforehand amounts accumulation $ 3,150, as declared above, the B-1 Promissory Addendum converted by their acceding into an accumulated of 560,594 shares of the Company’s Alternation B-1 Adopted b and 123,057 shares of Series C Adopted stock, and the Company’s B-2 Promissory Addendum adapted by their acceding into an accumulated of 1,174,042 shares of Alternation B-2 Adopted b and 333,959 shares of Alternation C Adopted stock.

 

In April 2015, the holders of the Fourteenth Adapted and Restated Anchored Convertible Promissory Addendum adopted to catechumen the outstanding arch and interest thereunder into 603,769 shares of the Company’s Alternation C Adopted stock.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

 

 

In April 2015, aloft the effectiveness of the Company’s Anatomy 10 filed with the Antithesis and Barter Commission, the outstanding shares of Alternation A-1 Preferred stock, Series A-2 Adopted stock, Alternation B-1 Adopted b and Alternation B-2 Adopted b adapted by their acceding into 2,131,081 shares of Common stock.

 

In April 2015, the Company issued 57,143 Alternation C Adopted b to a accompanying affair as appliance for the accouterment of admonition and abetment in connection with the filing of the Company’s Anatomy 10 and able a accessible advertisement company.

 

 

 

 

 

 

The warrants shall expire in February 2018 through December 2019, based on the arising date (see additionally Agenda 8).

 

 

 

 

In November 2004, the Board of Admiral of the Aggregation adopted a b advantage plan (“the Plan”), according to which options may be accustomed to employees, admiral and consultants.

 

Pursuant to the Plan, the Company reserved for arising 400,000 shares of Accustomed stock. Ceremony advantage entitles the holder to acquirement one allotment of Accustomed b of the Aggregation and expires afterwards 10 years from the date of grant. Any options that are terminated, cancelled, absent or not exercised, become accessible for approaching grants.

 

In November 2014, 10 years after it was adopted, the Plan expired.

 

In February 2014, the Board of Admiral of the Aggregation adopted a new b advantage plan (“the New Plan”), according to which options may be granted to employees, admiral and consultants.

 

Pursuant to the New Plan, the Company aloof for arising 714,286 shares of Accustomed stock. Ceremony advantage entitles the holder to acquirement one allotment of Common stock of the Aggregation and expires afterwards 10 years from the date of grant. Any options that are terminated, cancelled, forfeited or not exercised, become accessible for approaching grants.

 

As of December 31, 2016, under the New Plan, 115,404 options were accessible for approaching grants.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in bags (except share and per allotment data)

 

 

In addition, the Aggregation issued options to acquirement 275,038 shares of Accustomed B alfresco of the New Plan.

 

 

A arbitrary of the Company’s options activity and accompanying admonition with ceremony to options accustomed to advisers and admiral during the years assured December 31, 2016 are as follows:

 

Weighted

average remaining

contractual

life

Aggregate

intrinsic

value

 

Weighted boilerplate fair value of options accustomed to advisers and admiral during the years 2016 and 2015 was $ 3.34 and $ 2 per option, respectively.

 

Aggregate built-in accumulated of exercised options by advisers and admiral during the years 2016 and 2015 was $ 22, $ 0, respectively. The Accumulated intrinsic value of the acclimatized options represents the absolute built-in accumulated (the aberration amid the auction accumulated of the Company’s share at the date of exercise, and the exercise price) assorted by the cardinal of options exercised.

 

The accumulated built-in value in the table aloft represents the absolute built-in accumulated (the aberration amid the Company’s closing allotment accumulated on the last trading day of agenda 2016 and the exercise price, assorted by the cardinal of in-the-money options) that would accepting been received by the advantage holders had all advantage holders acclimatized their options on December 31, 2016. This accumulated is impacted by the changes in the fair bazaar accumulated of the Company’s shares.

 

As of December 31, 2016, the total anonymous estimated advantage accumulated accompanying to non-vested options accustomed above-mentioned to that date was $ 1,340 which is accustomed to be accustomed over a abounding boilerplate aeon of about 2.02 years. 

 

  

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in bags (except share and per allotment data)

 

 

 

The Company’s outstanding options accustomed to consultants as of December 31, 2016 are as follows:

 

 

As of December 31, 2016, all options accustomed to non-employees are absolutely vested.

 

 

The b based accumulated recognized in the cyberbanking statements for casework accustomed from advisers is apparent in the afterward table:

 

Year ended

December 31,

 

 

 

 

 

 

On January 5, 2016, the Israeli Parliament officially published the Law for the Alteration of the Israeli Tax Ordinance (Amendment 216), that reduces the accumulated tax accumulated from 26.5% to 25%.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in bags (except share and per allotment data)

 

 

In December 2016, the Israeli Parliament accustomed the Bread-and-er Efficiency Law (Legislative Amendments for Applying the Bread-and-er Activity for the 2017 and 2018 Budget Years), 2016 which reduces the accumulated assets tax accumulated to 24% (instead of 25%) able from January 1, 2017 and to 23% able from January 1, 2018.

 

 

 

 

 

Deferred assets taxes reflect the net tax furnishings of acting differences amid the accustomed amounts of assets and liabilities for cyberbanking purposes and the amounts acclimated for assets tax purposes. Cogent accoutrement of the Company’s deferred tax assets are as follows:

 

 

In assessing the adeptness of deferred tax assets, administering considers whether it is added able than not that all or some allocation of the deferred tax assets will not be realized.

 

The ultimate adeptness of the deferred tax assets is abased aloft the bearing of approaching taxable assets during the periods in which acting differences are deductible and net operating losses are utilized. Based on appliance of these factors, the Aggregation recorded a abounding valuation allowance at December 31, 2016 and 2015.

 

 

The basal reconciling items between the accustomed tax accumulated of the Aggregation and the able tax accumulated are the non-recognition of tax allowances from accumulated net operating accident carryforward amid the Aggregation and its accent due to the ambiguity of the adeptness of such tax benefits.

 

  

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in bags (except share and per allotment data)

 

 

 

 

The Aggregation recognizes interest and penalties accompanying to anonymous tax allowances in tax expense. During the year assured December 31, 2016 the Aggregation accrued $16 for assimilation and penalties costs accompanying to ambiguous tax positions.

 

 

 

 

Summary admonition about geographic areas:

 

ASC 280, “Segment Reporting,” establishes standards for advertisement admonition about operating segments. Operating segments are authentic as accoutrement of an enterprise about which abstracted cyberbanking admonition is accessible that is evaluated consistently by the arch operating accommodation maker in deciding how to admeasure assets and in assessing performance. The Aggregation manages its business on the abject of one reportable segment, and derives revenues from diplomacy its accessories mainly through benefactor agreements. The afterward is a arbitrary of revenues within geographic areas:

   

 

During the year assured December 31, 2016, there were no sales to a distinct chump beyond 10% of the Company’s revenues.

 

The Company’s long-lived assets are all amid in Israel.

 

 

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in bags (except allotment and per allotment data)

 

 

Retrospective adjustment of net accident per allotment information

 

The Aggregation has shares of Series C Adopted B outstanding which were issued in aboriginal 2015. The specific acceding and altitude of the Alternation C Adopted Shares are appear in Agenda 10.

 

When advancing its consolidated financial statements for the year assured December 31, 2015, its acting circumscribed cyberbanking statements for the agnate quarters and year to date periods absolute during 2015, and additionally the acting circumscribed cyberbanking statements for the assay assured March 31, 2016, the Aggregation brash these convertible aegis to be a accustomed b equivalents but afar them from its dilutive earnings (loss) per allotment ciphering as it assured that the antithesis would be anti-dilutive in attributes if or aback converted. However, aloft added assay and aback advancing it acting circumscribed cyberbanking statements for the added assay of 2016, the Aggregation has assured that these antithesis participate appropriately with accustomed shares in the profits, losses and liquidation values of the Company, and while apprenticed in voting they can be readily adapted into voting accustomed shares at any time. The Company has assured that they are accommodating antithesis that should accepting been included as a basal of both basal and dilutive earnings (loss) per allotment for all periods ahead presented. Adapted abstracts are presented beneath to reflect this revised conclusion.

 

 

The Aggregation has retrospectively adjusted for the aloft bulk in the accompanying circumscribed cyberbanking statements for the year assured December 31, 2015.

 

The afterward table sets forth the ciphering of the Company’s basal and adulterated net accident per allotment of Accustomed stock:

 

Year ended

December 31,

 

For the years assured December 31, 2016 and 2015, all outstanding options and warrants accepting been afar from the abacus of the adulterated net accident per share since their aftereffect was anti-dilutive.

 

  

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in bags (except allotment and per allotment data)

 

 

Balances with accompanying parties:

 

 

Related parties’ expenses:

 

 

 

 

The Aggregation evaluates events or diplomacy that activity afterwards the antithesis breadth date but above-mentioned to the arising of cyberbanking statements to lath additional evidence about to assertive estimates or to yze diplomacy that crave added disclosure.

 

On January 27, 2017, the Company entered into amendments to its two-year warrants (the “Warrant Amendment”) to acquirement an accumulated of 420,000 shares of accustomed b at an exercise accumulated of $3.00 per allotment and warrants to acquirement an accumulated of 420,000 shares of accustomed stock at an exercise accumulated of $6.00 per share, issued in January and February 2015, to extend the cessation date of the warrants for two added years. Pursuant to the Accreditation Amendment, warrants to acquirement 266,667 shares of accustomed b at $3.00 per share and warrants to acquirement 266,667 shares of accustomed b at $6.00 per allotment were to expire on January 29, 2019, and the warrants to acquirement 140,000 shares of accustomed b at $3.00 per allotment and warrants to acquirement 140,000 shares of accustomed b at $6.00 per allotment were to expire on February 10, 2019, and the warrants to acquirement 13,333 shares of accustomed b at $3.00 per allotment and warrants to acquirement 13,333 shares of accustomed b at $6.00 per allotment were to expire on February 23, 2019. The exercise price and all added acceding of the aboriginal warrants abide the same.

 

In March 2017, the Company completed a arch financing, pursuant to which the Aggregation accustomed from four investors $350,000 of loans and issued to the investors convertible promissory addendum (the “Notes”) in an accumulated arch accumulated of $350,000 and seven-year warrants (the “Warrants”) to acquirement an accumulated of 140,000 shares of accustomed b (the “Warrant Shares”) at an exercise price of $5.90 per allotment (the “Exercise Price”).

 

  

NANOVIBRONIX INC. AND ITS SUBSIDIARY

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in bags (except allotment and per allotment data)

 

 

The arch accumulated and all accrued but contributed assimilation on the Addendum will become due and payable on the date (the “Maturity Date”) that is the beforehand of the (i) 5-year ceremony of the date of issuance, or (ii) the date the Aggregation completes an disinterestedness financing pursuant to which the Aggregation issues and sells shares of basal b constant in accumulated accretion of at atomic $2,000 (a “Qualified Financing”). The Addendum buck assimilation at a accumulated of 6% per annum, payable on the Adeptness Date. To the admeasurement not previously converted, on the Adeptness Date, ceremony abettor will receive, at the advantage of the investor, either (a) banknote according to the original principal accumulated of the Addendum and assimilation again accrued and contributed thereon, or (b) shares of accustomed b or Alternation C Convertible Preferred B of the Company, at a accumulated per allotment according to the bottom of: (x) 80% of the accumulated according to the caliber obtained by abacus (i) the estimated accumulated of the Aggregation as of the Adeptness Date, as bent in able accepting by the Company’s board of directors, by (ii) the accumulated cardinal of outstanding shares of the Company’s accustomed stock, as of the Maturity Date on a absolutely adulterated basis, and (y) $5.90 per share, as such accumulated may be adapted for any b split, b dividend, reclassification or agnate contest affecting the basal b of the Company. Aloft cleanup of a Able Financing, the investors may elect to accepting the outstanding arch and accrued but contributed assimilation afterwards adapted into shares of the aloft chic and alternation of equity antithesis awash in such Able Financing, provided that the abettor may accepting to accepting shares of Alternation C Convertible Preferred B instead of shares of accustomed stock, to the admeasurement that accustomed b are issued in such Able Financing, at a accumulated per allotment according to the bottom of: (a) 80% of the accumulated per allotment at which such antithesis are awash in such Able Financing and (b) $5.90 per share, as such accumulated may be adapted for any b split, b dividend, reclassification or agnate events affecting the Company’s basal stock. If there is a change of ascendancy and the Addendum accepting not been ahead converted otherwise, the investors may, at their option, (a) accepting an accumulated in banknote according to the sum of the aboriginal arch amount of the Addendum and assimilation again accrued and contributed thereon, or (b) catechumen the Addendum and all accrued and contributed assimilation thereon into shares of Accustomed b or Alternation C Convertible Adopted B of the Aggregation anon above-mentioned to the closing of such change of ascendancy transaction at a accumulated per allotment according to the bottom of: (x) 80% of the accumulated according to the caliber acquired by dividing (i) the estimated accumulated of the Aggregation adumbrated by the barter acclimation set alternating in the acceding administering such change of control transaction, as bent in able accepting by the Company’s lath of directors, by (ii) the accumulated number of outstanding shares of the Company’s accustomed stock, anon above-mentioned to such change of ascendancy on a absolutely adulterated basis, and (y) $5.90 per share, as such accumulated may be adapted for any b split, b dividend, reclassification or agnate events affecting the Company’s basal stock.

 

The Warrants are immediately exercisable. The Warrants may be acclimatized on a cashless abject if there is no able allotment ceremony registering the resale of the Accreditation Shares afterwards the six ages ceremony of the arising date of the Warrants. The Exercise Accumulated is adjustable for assertive events, such as administering of b dividends, b splits or axiological diplomacy including mergers or sales of assets. A holder of the Warrants will not accepting the adapted to exercise any allocation of the Accreditation if the holder (together with its affiliates) would beneficially own in antithesis of 9.99% of the cardinal of shares of the Company’s accustomed b outstanding immediately afterwards giving aftereffect to the exercise, as such allotment buying is bent in accordance with the acceding of the Warrants. However, any holder may accepting or abatement such allotment to any added allotment not in antithesis of 9.99%, provided that any accepting in such allotment shall not be able until 61 canicule afterwards such apprehension to the Company.

 

     

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

 

The accompanying addendum are an basal allotment of the acting circumscribed cyberbanking statements.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

 

The accompanying addendum are an basal allotment of the acting circumscribed cyberbanking statements.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

U.S. dollars in bags (except allotment and per allotment data)

 

Six months ended

June 30,

Three months ended

June 30,

 

The accompanying addendum are an basal allotment of the acting circumscribed cyberbanking statements.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

 

*) Represents an accumulated lower than $ 1.

 

The accompanying addendum are an basal allotment of the acting circumscribed cyberbanking statements

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

 

The accompanying addendum are an basal allotment of the acting circumscribed cyberbanking statements.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

 

The Company’s adeptness to abide to accomplish is abased mainly on its adeptness to auspiciously bazaar and advertise its products and the cancellation of added costs until advantage is achieved. The Aggregation has incurred losses in the amount of $1,725 during the six ages aeon assured June 30, 2017, has an accumulated arrears of $25,142 as of June 30, 2017 and accumulated abrogating banknote breeze from operating activities in the accumulated of $919. The Aggregation expects to continue incurring losses and abrogating flows from operations. As a result, the Aggregation will not accepting able assets to fund its operations for the aing twelve months. These altitude accession abundant doubts about the Company’s ability to abide as a activity concern. During the aing twelve months administering expects that the Aggregation will allegation to accession additional capital to accounts its losses and abrogating banknote flows from operations and may abide to be abased on added capital raising as affiliated as its accessories do not adeptness bartering profitability. Management’s diplomacy lath the continued commercialization of the Company’s accessories and adopting basal through the auction of added disinterestedness securities, debt or basal inflows from cardinal partnerships. There are no assurances, however, that the Aggregation will be successful in accepting the akin of costs bare for its operations. If the Aggregation is bootless in commercializing its products and adopting capital, it will allegation to abate activities, abbreviate or cease operations. The cyberbanking statements do not include any adjustments with ceremony to the accustomed amounts of assets and liabilities and their allocation that adeptness be necessary should the Aggregation be clumsy to abide as a activity concern.

 

In the appraisal of management, the accompanying unaudited acting circumscribed cyberbanking statements reflect all adjustments, which lath abandoned accustomed alternating adjustments, all-important to accompaniment adequately the cyberbanking position and after-effects of operations of the Company. These circumscribed cyberbanking statements and addendum thereto are unaudited and should be apprehend in conjunction with the Company’s audited cyberbanking statements for the year assured December 31, 2016, as activate in the Company’s Annual Abode on Anatomy 10-K/A filed with the Antithesis and Barter Commission on July 26, 2017. The antithesis breadth for December 31, 2016 was acquired from the Company’s audited cyberbanking statements for the year assured December 31, 2016. The after-effects of operations for the six and three months assured June 30, 2017 are not necessarily apocalyptic of after-effects that could be accustomed for the absolute budgetary year.

 

 

 

The significant accounting behavior activated in the ceremony circumscribed cyberbanking statements of the Aggregation as of December 31, 2016 are activated consistently in these cyberbanking statements.

 

 

The accompanying unaudited circumscribed cyberbanking statements as of June 30, 2017 accepting been able in accordance with the U.S. generally accepted accounting attempt for acting cyberbanking information. Accordingly, they do not lath all the admonition and footnotes required by about accustomed accounting attempt in the United States for complete cyberbanking statements. In the appraisal of management, the unaudited acting circumscribed cyberbanking statements lath all adjustments of a accustomed alternating attributes necessary for a fair presentation of the Company’s circumscribed cyberbanking position as of June 30, 2017, the Company’s consolidated results of operation for the six and three months assured June 30, 2017 and the Company’s circumscribed banknote flows for the six months assured June 30, 2017.

 

 

ASC 820, “Fair Accumulated Abstracts and Disclosures” (“ASC 820”), defines fair accumulated as the accumulated that would be accustomed from diplomacy an asset or paid to alteration a accountability in an alike transaction amid bazaar participants at the measurement date. Aback chargeless the fair accumulated abstracts for assets and liabilities adapted to be recorded at fair value, the Aggregation considers the arch or best advantageous bazaar in which it would transact and considers assumptions that market participants would use aback appraisement the asset or liability, such as inherent risk, alteration restrictions and accident of nonperformance.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

ASC 820 additionally establishes a fair accumulated bureaucracy that requires an article to aerate the use of appreciable inputs and abbreviate the use of airy inputs aback barometer fair value. A cyberbanking instrument’s ysis aural the fair accumulated hierarchy is based on the everyman akin of ascribe that is cogent to the fair accumulated measurement. ASC 820 establishes three levels of inputs that may be acclimated to admeasurement fair value.

 

 

 

 

During February 2013, the Aggregation alive a convertible Promissory Addendum acceding (the “Agreement”) pursuant to which the Company issued anchored convertible Promissory Addendum (the “Notes”) to assertive investors on February 5, 2013.  On ceremony of March 28, 2013, June 3, 2013, August 5, 2013, October 7, 2013, December 9, 2013, February 6, 2014, April 1, 2014, May 15, 2014, June 16, 2014, August 7, 2014, September 7, 2014, October 13, 2014, November 19, 2014 and December 11, 2014, the Agreement and the Addendum were adapted and restated to accepting the arch accumulated by $100. In addition, with ceremony amendment, the Company issued to the holders of the Agenda warrants to acquirement up to 37,594 shares of accustomed b in appliance for an additional $100 per amendment. The exercise accumulated at which the warrants may be acclimatized is $2.66 per share, accountable to acclimation for stock splits, axiological diplomacy or agnate contest including “down round” protection. The warrants expire aural a period of bristles years, based on the arising date. 

 

In April 2015, the holders of the Addendum adopted to catechumen the outstanding arch and assimilation thereunder into shares of the Company’s series C adopted stock. On that date, an accumulated arch antithesis of $1,500 and $106 in accrued assimilation were adapted into 603,769 shares of alternation C adopted stock.  The shares of alternation C adopted b were not registered beneath the Securities Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the absolution from registration under the Antithesis Act of 1933, as amended, provided by Breadth 3(a)(9) of the Antithesis Act of 1933, as amended.

 

The Company measures the warrants at fair accumulated by applying the Black-Scholes advantage appraisement archetypal in ceremony advertisement aeon until they are acclimatized or expired, with changes in fair accumulated actuality accustomed in the Company’s circumscribed ceremony of comprehensive loss as cyberbanking assets or expense.

 

In estimating the warrants’ fair value, the Aggregation acclimated the afterward assumptions:

 

 

 

Fair value altitude appliance cogent airy inputs (Level 3):

 

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

Effective as of January 27, 2017, the Aggregation entered into amendments to its two-year warrants (the “Warrant Amendment”) to purchase an accumulated of 420,000 shares of accustomed b at an exercise accumulated of $3.00 per allotment and warrants to acquirement an aggregate of 420,000 shares of accustomed b at an exercise accumulated of $6.00 per share, issued in January and February 2015, to extend the expiration date of the warrants for two added years. Pursuant to the Accreditation Amendment, warrants to acquirement 266,667 shares of accustomed b at $3.00 per allotment and warrants to acquirement 266,667 shares of accustomed b at $6.00 per allotment were to expire on January 29, 2019, and the warrants to acquirement 140,000 shares of accustomed b at $3.00 per allotment and warrants to acquirement 140,000 shares of accustomed b at $6.00 per allotment were to expire on February 10, 2019, and the warrants to acquirement 13,333 shares of common stock at $3.00 per allotment and warrants to acquirement 13,333 shares of accustomed b at $6.00 per allotment were to expire on February 23, 2019. The exercise accumulated and all added acceding of the aboriginal warrants abide the same. Aback essentially all of the warrants to acquirement 840,000 shares of accustomed b accountable to the Accreditation Alteration are captivated by the Company’s stockholders, the Warrant Alteration was accounted for as “deemed dividend,” which was abstinent at the accumulated according to the incremental value absorption the change in the fair accumulated of the warrants afore and afterwards the Accreditation Amendment. Accordingly, a accounted dividend in the accumulated of $841 was recorded to the Ceremony of Changes in Stockholders’ Absence as an accepting in additional paid-in basal with a agnate accepting in the accumulated deficit.

 

In March 2017, the Aggregation completed a arch financing, pursuant to which the Aggregation accustomed from four investors $350 of loans and issued to the investors convertible promissory addendum (the “2017 Notes”) in an accumulated arch accumulated of $350 and seven-year warrants (the “Warrants”) to acquirement an accumulated of 140,000 shares of accustomed b at an exercise price of $5.90 per allotment (the “Exercise Price”) (see Agenda 5). The Aggregation abstinent the Warrants at fair accumulated on their issuance date by applying the Black-Scholes options appraisement model, according to the afterward assumptions:

 

 

Expected term – was based on the adeptness date of the warrants.

 

 In May and June 2017, the Aggregation completed added arch financings, pursuant to which the Aggregation accustomed from bristles investors $680 of loans and issued to the investors 2017 Addendum in an accumulated arch accumulated of $680 and Warrants to acquirement an aggregate of 272,000 shares of accustomed b at the Exercise Accumulated (see Agenda 5). The Aggregation abstinent the Warrants at fair accumulated on their issuance date by applying the Black-Scholes options appraisement model, according to the afterward assumptions:

 

 

 

In addition, the Company’s cyberbanking instruments additionally lath banknote and banknote equivalents, barter receivables, prepaid expenses and added accounts receivable, barter payables and added accounts payable. The fair accumulated of these cyberbanking instruments was not materially altered from their accustomed belief as of June 30, 2017 due to the concise maturities of such instruments.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

 

   

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

 Since March 1, 2017, we accepting completed a alternation of arch financings pursuant to which we accepting accustomed from accepted investorsaggregate proceeds of $1,030 in barter for 2017 Addendum in the accumulated arch accumulated of $1,030, and seven-year Warrants to purchase an accumulated of 412,000 shares of accustomed b at an exercise accumulated of $5.90 per share.

 

The principal accumulated and all accrued but contributed assimilation on the 2017 Addendum will become due and payable on the date (the “Maturity Date”) that is the beforehand of the (i) 5-year ceremony of the date of issuance, or (ii) the date the Aggregation completes an disinterestedness costs pursuant to which the Aggregation issues and sells shares of basal b constant in accumulated accretion of at atomic $2,000 (a “Qualified Financing”). The 2017 Addendum buck assimilation at a accumulated of 6% per annum, payable on the Maturity Date. To the admeasurement not ahead converted, on the Adeptness Date, ceremony abettor will receive, at the advantage of the investor, either (a) banknote according to the aboriginal arch accumulated of the 2017 Addendum and assimilation again accrued and contributed thereon, or (b) shares of accustomed b or Alternation C Convertible Adopted B of the Company, at a accumulated per allotment according to the lesser of: (x) 80% of the accumulated according to the caliber acquired by abacus (i) the estimated accumulated of the Aggregation as of the Maturity Date, as bent in able accepting by the Company’s lath of directors, by (ii) the accumulated cardinal of outstanding shares of the Company’s accustomed stock, as of the Adeptness Date on a absolutely adulterated basis, and (y) $5.90 per share, as such amount may be adapted for any b split, b dividend, reclassification or agnate contest affecting the basal b of the Company. Aloft cleanup of a Able Financing, the investors may accepting to accepting the outstanding arch and accrued but contributed assimilation afterwards adapted into shares of the aloft chic and alternation of disinterestedness antithesis awash in such Able Financing, provided that the abettor may accepting to accepting shares of Alternation C Convertible Adopted B instead of shares of accustomed stock, to the admeasurement that accustomed b are issued in such Able Financing, at a accumulated per allotment according to the bottom of: (a) 80% of the accumulated per allotment at which such antithesis are awash in such Able Costs and (b) $5.90 per share, as such accumulated may be adapted for any b split, b dividend, reclassification or agnate contest affecting the Company’s basal stock. If there is a change of ascendancy and the 2017 Addendum accepting not been ahead adapted otherwise, the investors may, at their option, (a) accepting an accumulated in banknote according to the sum of the aboriginal arch accumulated of the 2017 Addendum and assimilation again accrued and unpaid thereon, or (b) catechumen the 2017 Addendum and all accrued and contributed assimilation afterwards into shares of accustomed b or Series C Convertible Adopted B of the Aggregation anon above-mentioned to the closing of such change of ascendancy transaction at a price per allotment according to the bottom of: (x) 80% of the accumulated according to the caliber acquired by abacus (i) the estimated value of the Aggregation adumbrated by the barter acclimation set alternating in the acceding administering such change of ascendancy transaction, as determined in able accepting by the Company’s lath of directors, by (ii) the accumulated cardinal of outstanding shares of the Company’s common stock, anon above-mentioned to such change of ascendancy on a absolutely adulterated basis, and (y) $5.90 per share, as such accumulated may be adapted for any b split, b dividend, reclassification or agnate contest affecting the Company’s basal stock.

 

As a aftereffect of arising the warrants and as a aftereffect of the abatement on the about-face accumulated of the 2017 Notes, the Aggregation recorded in the six months and three months assured June 30, 2017 a ceremony basal in the accumulated of $637 and $415, respectively, to be amortized over the accustomed activity of the 2017 Notes.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

    

Stock based compensation

  

During the six and three-month aeon assured June 30, 2017 the Aggregation recorded allotment based advantage in a absolute accumulated of $536 and $185, respectively. During the six and three-month aeon assured June 30, 2016 the Aggregation recorded allotment based advantage in a absolute accumulated of $121 and $56, respectively.

 

In connection with the abandonment of a administrator from our lath of directors, on March 30, 2017, we adapted the advantage agreement, dated March 25, 2015, we entered into an acceding with the accommodated administrator for the accepting of an advantage to acquirement 30,000 shares of accustomed b at an exercise accumulated of $2.57 per share, all of which accepting vested, and the advantage agreement, anachronous July 18, 2016, for the accepting of an advantage to acquirement 40,000 shares of accustomed b at an exercise accumulated of $5.35 per share, all of which were vesting on July 18, 2017, to (i) beforehand the vesting of the advantage accustomed to the administrator in 2016 so that it will be fully vested as of March 30, 2017, and (ii) admittance the administrator to exercise the options accustomed in 2015 and 2016 at any time above-mentioned to the cessation of the advantage aeon as set alternating in the applicative advantage agreement. This modification resulted in additional share based advantage accumulated of $98 and $0 in the six and three months assured June 30, 2017.

 

As of June 30, 2017, the absolute anonymous estimated advantage accumulated accompanying to non-vested b options accustomed above-mentioned to that date was $992, which is accustomed to be accustomed over a abounding boilerplate aeon of about 2.8 years.

 

 

Future minimum lease commitments beneath non-cancelable operating allotment agreements as of June 30, 2017 are as follows:

 

 

The Aggregation leases motor vehicles beneath cancelable allotment agreements. The Aggregation has an advantage to be appear from this allotment agreement, which may result in penalties in a best accumulated of about $5.

 

Rent and accompanying expenses were $13 and $15 for the six months and $7 and $7 for the three months assured June 30, 2017 and 2016, respectively.

 

Motor abettor leases and accompanying costs were $9 and $5 for the six months and $4 and $3 for the three months assured June 30, 2017 and 2016, respectively.

 

 

Under the Company’s subsidiary assay and development agreements with the OCS and pursuant to applicative laws, the Aggregation is adapted to pay royalties at the accumulated of 3-3.5% of sales of accessories developed with funds provided by the OCS, up to an accumulated according to 100% of the OCS research and development grants received, affiliated to the dollar including accrued assimilation at the LIBOR rate. The Aggregation is obligated to accord the Israeli Government for the grants accustomed abandoned to the admeasurement that there are sales of the adjourned products.

 

As of June 30, 2017, there are no sales from the adjourned activity and the Aggregation has a accidental obligation to pay royalties in the arch amount of about $ 492. In addition, the OCS may accredit assertive altitude on any acclimation beneath which it permits the Company to alteration technology or development out of Israel.

 

 

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

All outstanding allotment options and warrants for the six and the three months assured June 30, 2017 and 2016 accepting been afar from the calculation of the adulterated accident per allotment because all such antithesis are anti-dilutive for all periods presented.  

 

   

NANOVIBRONIX, INC. AND ITS SUBSIDIARY

 

 

Summary information about geographic areas:

 

The Company manages its business on the abject of one reportable segment, and derives revenues from diplomacy its accessories anon to patients as able-bodied as through benefactor agreements. The afterward is a arbitrary of revenues aural geographic areas:

 

Six months ended  

June 30,

Three months ended

June 30,

 

During the six and three ages aeon assured June 30, 2017, revenues from distributors accounted for 36% and 37% of absolute revenues. During the six and three ages aeon assured June 30, 2016, revenues from distributors accounted for 33% and 27% of absolute revenues.

 

The Company’s abiding assets are all amid in Israel.  

 

 

The Company evaluates contest or diplomacy that activity afterwards the antithesis breadth date but above-mentioned to the arising of cyberbanking statements to lath added affirmation about to assertive estimates or to yze diplomacy that crave added disclosure. For its interim circumscribed cyberbanking statements as of June 30, 2017 (unaudited) and for the three months aeon again assured (unaudited), the Aggregation evaluated consecutive contest through August 14, 2017 the date that the circumscribed cyberbanking statements were issued.

 

  

Click to enlarge

 

NanoVibronix, Inc.

 

857,143 Shares of

Common Stock,

Warrants to Acquirement up to 642,858 Shares of Accustomed Stock

(642,858 Shares of Accustomed B Underlying the Warrants)

and

858 Shares of Alternation D Convertible Preferred Stock

(857,143 Shares of Accustomed B Underlying the Alternation D Convertible Adopted Stock)

 

 

PROSPECTUS

 

 

Dawson James Securities, Inc.

 

, 2017

 

 

PART II

 

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 13.   Other Costs of Arising and Distribution.

 

The afterward table sets alternating the costs and expenses, added than underwriting discounts and commissions, payable by us in affiliation with the auction and administering of the antithesis actuality registered. All amounts are estimates except for the Antithesis and Barter Commission allotment fee, the NASDAQ filing fee and the FINRA filing fee.

 

 

Item 14.   Indemnification of Admiral and Officers.

 

Section 145 of the Accustomed Corporation Law of the Accompaniment of Delaware provides, in general, that a association congenital beneath the laws of the Accompaniment of Delaware, as we are, may atone any actuality who was or is a affair or is threatened to be fabricated a affair to any threatened, awaiting or completed action, clothing or proceeding (other than a acquired activity by or in the adapted of the corporation) by acumen of the actuality that such person is or was a director, officer, abettor or abettor of the corporation, or is or was confined at the appeal of the corporation as a director, officer, abettor or abettor of accession enterprise, adjoin costs (including attorneys’ fees), judgments, fines and amounts paid in acclimation absolutely and ytic incurred by such actuality in affiliation with such action, clothing or proceeding if such actuality acted in able accepting and in a abode such actuality ytic believed to be in or not adjoin to the best interests of the association and, with ceremony to any bent activity or proceeding, had no reasonable ceremony to accepting such person’s conduct was unlawful. In the case of a acquired action, a Delaware association may atone any such actuality adjoin expenses (including attorneys’ fees) absolutely and ytic incurred by such actuality in affiliation with the aegis or settlement of such activity or clothing if such actuality acted in able accepting and in a abode such actuality ytic believed to be in or not opposed to the best interests of the corporation, except that no apology will be fabricated in ceremony of any claim, affair or matter as to which such actuality will accepting been adjudged to be accountable to the association unless and abandoned to the admeasurement that the Cloister of Chancery of the Accompaniment of Delaware or any added cloister in which such activity was brought determines such actuality is adequately and reasonably entitled to apology for such expenses.

 

Our affidavit of assimilation and bylaws provide that we will atone our directors, officers, advisers and agents to the admeasurement and in the abode able by the provisions of the Accustomed Association Law of the Accompaniment of Delaware, as adapted from time to time, accountable to any permissible expansion or limitation of such indemnification, as may be set alternating in any stockholders’ or directors’ resolution or by contract. Any aition or modification of these accoutrement accustomed by our stockholders will be -to-be abandoned and will not abnormally affect any limitation on the accountability of any of our admiral or admiral absolute as of the time of such aition or modification.

 

We are additionally able to administrate for insurance on ceremony of any director, officer, abettor or added abettor for accountability arising out of his actions, whether or not the General Corporation Law of the Accompaniment of Delaware would admittance indemnification.

   

 

Item 15. Contempo Sales of Unregistered Securities.

 

On June 16, 2014, we alive the ninth amendment to an acceding we had entered into with assertive investors on February 5, 2013, according to which we issued convertible promissory notes in appliance for $100,000, in such aboriginal arch amount, and which was afterwards adapted eight times, pursuant to ceremony amendment, the aboriginal arch accumulated had been added by $100,000. The addendum are convertible to accustomed b and bear assimilation at 6% annually. In affiliation with the ninth alteration we issued convertible promissory addendum in appliance for $100,000 with the aloft acceding declared above, so that the accumulated aboriginal arch accumulated was added to $1,000,000. In addition, on such date, we issued warrants to acquirement up to an accumulated of 37,594 shares of accustomed b with an exercise price of $2.66 per share, accountable to adjustments, and a five-year term. The antithesis issued in the aloft declared diplomacy were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended. Ceremony abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On August 7, 2014, we alive the tenth amendment to the acceding declared aloft and issued convertible promissory addendum in appliance for $100,000 with the same terms declared above, so that the accumulated aboriginal arch accumulated was added to $1,100,000. In accession on such date, we issued warrants to acquirement up to an accumulated of 37,594 shares of accustomed b with an exercise accumulated of $2.66 per share, subject to adjustments, and a five-year term. The antithesis issued in the aloft declared diplomacy were not registered under the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the exemption from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Antithesis Act of 1933, as amended. Ceremony abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On September 7, 2014, we alive the eleventh amendment to the acceding declared aloft and issued convertible promissory addendum in appliance for $100,000 with the same terms declared above, so that the accumulated aboriginal arch accumulated was added to $1,200,000. In accession on such date, we issued warrants to acquirement up to an accumulated of 37,594 shares of accustomed b with an exercise accumulated of $2.66 per share, subject to adjustments, and a five-year term. The antithesis issued in the aloft declared diplomacy were not registered under the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the exemption from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Antithesis Act of 1933, as amended. Ceremony abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On October 13, 2014, we alive the twelfth amendment to the acceding declared aloft and issued convertible promissory addendum in appliance for $100,000 with the same terms declared above, so that the accumulated aboriginal arch accumulated was added to $1,300,000. In accession on such date, we issued warrants to acquirement up to an accumulated of 37,594 shares of accustomed b with an exercise accumulated of $2.66 per share, subject to adjustments, and a five-year term. The antithesis issued in the aloft declared diplomacy were not registered under the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the exemption from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Antithesis Act of 1933, as amended. Ceremony abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On November 19, 2014, we alive the thirteenth amendment to the acceding declared aloft and issued convertible promissory addendum in appliance for $100,000 with the same terms declared above, so that the accumulated aboriginal arch accumulated was added to $1,400,000. In accession on such date, we issued warrants to acquirement up to an accumulated of 37,594 shares of accustomed b with an exercise accumulated of $2.66 per share, subject to adjustments, and a five-year term. The antithesis issued in the aloft declared diplomacy were not registered under the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the exemption from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Antithesis Act of 1933, as amended. Ceremony abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

  

 

On December 11, 2014, we alive the fourteenth amendment to the acceding declared aloft and issued convertible promissory addendum in appliance for $100,000 with the same terms declared above, so that the accumulated aboriginal arch accumulated was added to $1,500,000. In accession on such date, we issued warrants to acquirement up to an accumulated of 37,594 shares of accustomed b with an exercise accumulated of $2.66 per share, subject to adjustments, and a five-year term. The antithesis issued in the aloft declared diplomacy were not registered under the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the exemption from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Antithesis Act of 1933, as amended. Ceremony abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

In January and February 2015, we entered into antithesis acquirement agreements with assertive investors accouterment for the arising of shares of accustomed stock, shares of Series C Adopted B and warrants to acquirement shares of accustomed stock. Pursuant to these agreements, we issued an accumulated of 833,333 shares of Alternation C Adopted Stock, 216,667 shares of accustomed b and warrants to acquirement 420,000 shares of accustomed b at an exercise accumulated of $3.00 per allotment and warrants to acquirement 420,000 shares of accustomed b at an exercise accumulated of $6.00 per share, for accumulated appliance of $3,005,000 net of arising costs of $145,000 which were ahead recorded as deferred issuance costs. The antithesis issued in the aloft declared diplomacy were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the absolution from allotment beneath the Securities Act of 1933, as amended, provided by Breadth 4(a)(2) of the Antithesis Act of 1933, as amended. Ceremony abettor was an accredited abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On February 10, 2015, aloft our receipt of beforehand amounts accumulation $3,150,000 our Convertible B-1 Promissory Addendum adapted by their acceding into an accumulated of 560,594 shares of alternation B-1 adopted b and 123,057 shares of Alternation C Adopted Stock, and our Convertible B-2 Promissory Notes adapted by their acceding into an accumulated of 1,174,042 shares of alternation B-2 adopted b and 333,959 shares of Series C Adopted Stock. The antithesis issued in the aloft declared diplomacy were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the absolution from allotment beneath the Securities Act of 1933, as amended, provided by Breadth 3(a)(9) of the Antithesis Act of 1933, as amended.

 

On March 25, 2015, we issued warrants to purchase up to 61,000 shares of accustomed b to AYTA Consulting, LLC as appliance for the accouterment of admonition and assistance in affiliation with the filing of our Anatomy 10 and able a accessible advertisement company. The warrants accepting an exercise accumulated of $2.57 per share, accountable to acclimation for b splits, axiological diplomacy or agnate contest and shall expire on March 25, 2020. The accreditation was not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and was offered and awash in affirmation on the absolution from allotment afforded by Breadth 4(a)(2) and Acclimation D (Rule 506) beneath the Securities Act of 1933, as amended, and agnate accoutrement of accompaniment antithesis laws, which absolved diplomacy by an issuer not involving a accessible offering.

 

On April 10, 2015, automatically aloft the effectiveness of our allotment ceremony on Anatomy 10 filed with the Antithesis and Barter Commission, all of our issued and outstanding shares of alternation A-1 adopted b adapted into an accumulated of 371,928 shares of accustomed stock, all of our issued and outstanding shares of alternation A-2 adopted b adapted into an accumulated of 24,517 shares of accustomed stock, all of our issued and outstanding shares of alternation B-1 adopted b adapted into an accumulated of 560,594 shares of accustomed b and all of our issued and outstanding shares of alternation B-2 adopted b adapted into an accumulated of 1,174,042 shares of common stock. The antithesis issued in the aloft declared diplomacy were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the absolution from allotment beneath the Securities Act of 1933, as amended, provided by Breadth 3(a)(9) of the Antithesis Act of 1933, as amended.

  

 

On April 10, 2015, automatically aloft the effectiveness of the Anatomy 10, warrants which were ahead convertible into alternation B-2 adopted b were adapted into warrants to acquirement up to an accumulated of 331,293 shares of accustomed b at an exercise accumulated of $1.393. The warrants are contrarily identical to the warrants convertible into alternation B-2 adopted stock. The warrants lath accustomed anti-dilution protection. The holders of such warrants accepting the adapted to exercise the warrants by agency of a cashless exercise. Aloft the accident of assertive change of ascendancy transactions, again any holder of the warrants shall, aloft exercise, accepting the adapted to accepting the aloft antithesis as if it had acclimatized the warrants anon afore the cleanup of such transaction. The warrants expire on November 15, 2018. Assertive of these warrants lath accoutrement that block exercise if such exercise will aftereffect in the holder accepting beneficial ownership of added than 9.99% of our accustomed stock. The antithesis issued in the aloft declared diplomacy were not registered under the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the exemption from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 3(a)(9) of the Antithesis Act of 1933, as amended.

 

On April 27, 2015, the holders of our Fifteenth Amended and Restated Anchored Convertible Promissory Notes, anachronous December 11, 2014, adopted to catechumen the outstanding principal and assimilation thereunder into shares of Alternation C Adopted Stock. On that date, an accumulated arch antithesis of $1,500,000 and $106,027 in accrued assimilation were adapted into 603,769 shares of Alternation C Adopted Stock. The shares of Alternation C Preferred Stock were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 3(a)(9) of the Antithesis Act of 1933, as amended.

 

In April 2015, we issued 100,000 shares of accustomed b to our acknowledged admonition as allotment of the absolute appliance for its acknowledged casework associated with our armamentarium raising. These antithesis were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the exemptions from allotment beneath the Antithesis Act of 1933, as amended, provided by Section 4(a)(2) and beneath Acclimation D of the Antithesis Act of 1933, as amended. The abettor was an accepted abettor (as defined by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

In April 2015, we issued 57,143 shares of Alternation C Adopted B to AYTA Consulting, LLC, a adviser to us, as appliance for the accouterment of admonition and assistance in affiliation with the filing of our Anatomy 10 and able a accessible advertisement company. These antithesis were not registered under the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the exemption from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Antithesis Act of 1933, as amended. The abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On July 18, 2016, we issued 9,000 restricted shares of accustomed b to Arising Markets Consulting, LLC, a adviser to us, as appliance for consulting services. These securities were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and awash pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Antithesis Act of 1933, as amended. The abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Securities Act of 1933, as amended) at the time of the transaction.

 

On March 1, 2017, we completed a bridge financing, pursuant to which we accustomed from three accepted investors $250,000 of loans and issued to the investors convertible promissory addendum in an accumulated arch accumulated of $250,000 and seven-year warrants to acquirement an accumulated of 100,000 shares of accustomed b at an exercise accumulated of $5.90 per allotment accountable to adjustments. The antithesis issued in the aloft declared transactions were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and sold pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended. Ceremony abettor was an accepted abettor (as authentic by Aphorism 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On March 23, 2017, we completed a bridge financing, pursuant to which we accustomed from an accepted abettor $100,000 of loans and issued to the investors convertible promissory addendum in an accumulated arch accumulated of $100,000 and seven-year warrants to acquirement an accumulated of 40,000 shares of accustomed b at an exercise accumulated of $5.90 per allotment accountable to adjustments. The antithesis issued in the aloft declared transactions were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and sold pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended, and Aphorism 506 of Acclimation D thereunder. The abettor was an accepted abettor (as authentic by Rule 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

  

 

On May 3, 2017, we completed a arch financing, pursuant to which we accustomed from two accepted abettor $130,000 of loans and issued to the investors convertible promissory notes in an accumulated arch accumulated of $130,000 and seven-year warrants to acquirement an accumulated of 52,000 shares of common stock at an exercise accumulated of $5.90 per allotment accountable to adjustments. The antithesis issued in the aloft declared transactions were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and sold pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended, and Aphorism 506 of Acclimation D thereunder. The abettor was an accepted abettor (as authentic by Rule 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On May 28, 2017, we completed a bridge financing, pursuant to which we accustomed from an accepted abettor $25,000 of loans and issued to the investors convertible promissory addendum in an accumulated arch accumulated of $25,000 and seven-year warrants to acquirement an accumulated of 10,000 shares of accustomed b at an exercise accumulated of $5.90 per allotment accountable to adjustments. The antithesis issued in the aloft declared transactions were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and sold pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended, and Aphorism 506 of Acclimation D thereunder. The abettor was an accepted abettor (as authentic by Rule 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On June 2, 2017, we completed a bridge financing, pursuant to which we accustomed from an accepted abettor $25,000 of loans and issued to the investors convertible promissory addendum in an accumulated arch accumulated of $25,000 and seven-year warrants to acquirement an accumulated of 10,000 shares of accustomed b at an exercise accumulated of $5.90 per allotment accountable to adjustments. The antithesis issued in the aloft declared transactions were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and sold pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended, and Aphorism 506 of Acclimation D thereunder. The abettor was an accepted abettor (as authentic by Rule 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On June 8, 2017, we completed a bridge financing, pursuant to which we accustomed from an accepted abettor $500,000 of loans and issued to the investors convertible promissory addendum in an accumulated arch accumulated of $500,000 and seven-year warrants to acquirement an accumulated of 200,000 shares of accustomed b at an exercise accumulated of $5.90 per allotment accountable to adjustments. The antithesis issued in the aloft declared transactions were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and sold pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended, and Aphorism 506 of Acclimation D thereunder. The abettor was an accepted abettor (as authentic by Rule 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On August 25, 2017, we completed a bridge financing, pursuant to which we accustomed from an accepted abettor $200,000 of loans and issued to the investors convertible promissory addendum in an accumulated arch accumulated of $200,000 and seven-year warrants to acquirement an accumulated of 80,000 shares of accustomed b at an exercise accumulated of $5.90 per allotment accountable to adjustments. The antithesis issued in the aloft declared transactions were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and sold pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended, and Aphorism 506 of Acclimation D thereunder. The abettor was an accepted abettor (as authentic by Rule 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

On September 20, 2017, we completed a bridge financing, pursuant to which we accustomed from an accepted abettor $150,000 of loans and issued to the investors convertible promissory addendum in an accumulated arch accumulated of $150,000 and seven-year warrants to acquirement an accumulated of 60,000 shares of accustomed b at an exercise accumulated of $5.90 per allotment accountable to adjustments. The antithesis issued in the aloft declared transactions were not registered beneath the Antithesis Act of 1933, as amended, or the antithesis laws of any state, and were offered and sold pursuant to the absolution from allotment beneath the Antithesis Act of 1933, as amended, provided by Breadth 4(a)(2) of the Securities Act of 1933, as amended, and Aphorism 506 of Acclimation D thereunder. The abettor was an accepted abettor (as authentic by Rule 501 beneath the Antithesis Act of 1933, as amended) at the time of the transaction.

 

 

 

(a) Exhibits

 

4.4*

Form of Accreditation Agency Agreement

 

 

 

 

 

 

 

 

* Filed herewith.

** Ahead filed.

Administering acclimation or compensatory plan or arrangement.

 

(b) Cyberbanking Ceremony Schedules

 

No cyberbanking ceremony schedules are provided because the admonition is not adapted or is apparent either in the cyberbanking statements or the addendum thereto.

 

Item 17. Undertakings.

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Antithesis Act of 1933, the apprentice has appropriately acquired this allotment ceremony to be alive on its ceremony by the undersigned, thereunto appropriately on October 31, 2017.

 

 

In accordance with the requirements of the Antithesis Act of 1933, this Alteration No. 4 to allotment ceremony has been alive by the afterward bodies in the capacities and on the dates indicated.

 

 

 

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