We hold an investment portfolio of securities that could experience losses.

~~Our financial condition~~We invest our cash resources not required for near-term operations in a portfolio of debt securities. These securities are evaluated by independent rating agencies and ~~results~~meet the criteria of “investment grade” securities at the time of purchase. Changes in domestic or world-wide economic conditions, or in the operations ~~may continue to be adversely affected by~~of the ~~ongoing coronavirus outbreak.~~

The ongoing COVID-19 coronavirus pandemic, any future outbreak of contagious diseases, or other adverse public health developments, could have a material and adverse effect on our business operations. Such adverse effects could include disruptions or restrictions on the ability of our customers, distributors and suppliers to maintain normal business activities. It could also affect the ability of our personnel to perform their normal responsibilities andissuing entities could result in ~~temporary closures~~a rating downgrade of ~~our facilities.~~

~~As COVID-19 continues~~the securities or an inability of the issuer to meet its obligation to the Company upon maturity. In this event, the Company would be exposed to loss in value of the security. If the change in economic conditions was so severe as to affect ~~individuals~~the overall securities market and ~~businesses around the globe, we may experience disruptions that could severely impact our business, including:~~

•~~restrictions on the conduct of our business imposed by governmental regulators;~~

•~~diversion or prioritization of healthcare resources away from diagnostic testing using our medical devices by physician clinics, hospitals, home testing services and other healthcare providers;~~

•~~supply chain disruption, including delays in fulfillment or cancellations of purchase orders by our parts and services suppliers which would hamper our manufacturing capabilities;~~

•limitations on employee resources that would otherwise be focused on our business activities, including because of sickness of employees or their families or requirements imposed on employees to avoid contact with large groups of people;

•~~disruption in our distribution channels, including shipping providers and distributors.~~

~~While we were able to maintain our business operations during 2020, albeit at~~therefore a level below our plans for the year, our future results of operations could be adversely affected to the extent that this pandemic or any other epidemic harms our business or the economy in general either domestically or in any other region in which we do business. The extent to which COVID-19 affects our operations will depend on future developments, which continue to be uncertain and cannot be predicted with confidence, including the durationsignificant part of the ~~pandemic, new information that may emerge concerning pandemic severity, efforts for widespread vaccination of~~Company’s portfolio, the ~~public,~~loss in value could jeopardize the Company’s ability to adequately fund its operations, its strategic initiatives and ~~treatment of those who have contracted COVID-19, among others, could have an adverse effect on our business~~achieve its development and ~~financial condition.~~commercialization goals.

We are focused on growing sales of ~~DPNCheck, our test for diabetic peripheral neuropathy, and~~ Quell, our wearable device for chronic ~~pain.~~pain, and DPNCheck, our test for peripheral neuropathy, and. We cannot assure you that we will be successful with these products or future product candidates or product enhancements in our development pipeline.

Quell was launched in June 2015, and is a wearable neuromodulation device for the symptomatic relief and management of chronic pain indications. We are ~~focused on growing sales~~leveraging our core Quell technology into a portfolio of ~~DPNCheck primarily~~Rx wearable neurotherapeutics. Quell - Fibromyalgia, the first product in this emerging portfolio, was launched in late 2022 as an aid for reducing the ~~United States, Asia and Mexico, and sales~~symptoms of fibromyalgia in adults with high pain sensitivity. We have recently filed with FDA a 510(k) marketing application for Quell ~~within the United States.~~ – CIPN.

DPNCheck was launched in 2011 and is a ~~quantitative~~ nerve conduction test for ~~systemic~~peripheral neuropathies such as ~~DPN. Quell~~diabetic peripheral neuropathy. Our sales strategy for DPNCheck has ~~been~~focused on the U.S. MA sector through our own commercial team, and physician offices and hospitals in Japan and China through distribution partners.

The MA market ~~since June 2015~~experienced substantial change during 2023 when CMS issued new rules on the MA RADV program that is used to recover improper risk adjustment payments made to MA plans and ~~is an over-the-counter wearable device~~also issued its 2024 Medicare Advantage Advance Notice, which confirmed substantial changes to the HCC risk adjustment model limiting HCC codes for ~~chronic pain.~~ many types of peripheral neuropathies. The impact of these factors on 2023 DPNCheck revenue was materially adverse. While we continue to support our customers and work to acquire new accounts, we do not expect a near-term recovery from the decline in DPNCheck revenue.

Our future prospects are closely tied to our success with ~~DPNCheck~~Quell and ~~Quell,~~DPNCheck, which, in turn, depend upon market acceptance and growth in future revenues and margins. We cannot assure you that our commercialization strategy will be successful. If our strategy is not successful, it could materially affect our revenues and results of operations.

Our future success could be adversely affected by a number of factors, including:

•inability to increase adoption of DPNCheck within the ~~Medicare Advantage~~MA market and ~~Outside~~outside the United ~~States (OUS) markets;~~States;

•regulatory inquiries or issues affecting our products;

•unfavorable changes to current Medicare, Medicare Advantage and commercial payer payment policies;

•changes to payor policies under the Patient Protection and Affordable Care Act;

•inability to efficiently create market demand for prescription wearable neurotherapeutics based on Quell technology at profitable pricing and with efficient ~~digital~~ marketing;

•manufacturing issues with Quell or our other products;

•unfavorable experiences by patients and physicians using DPNCheck, Quell and our other products; and,

•physicians’ or patients' reluctance to alter their existing practices and adopt the use of our devices.

If we are unable to expand exposure and market demand for DPNCheck and Quell, our ability to increase our revenues will be limited and our business prospects will be adversely affected.

Our current and future revenue is dependent upon commercial acceptance of our products in the marketplace. ~~The failure of such acceptance~~If our products are not accepted by prescribers and customers, our operations will be materially and adversely ~~affect our operations.~~affected.

We will continue to incur operating losses until such time as sales of Quell, DPNCheck ~~Quell~~ and other products or product candidates reach a mature level and we are able to generate sufficient revenue from their sale to meet our operating expenses. There can be no assurance that customers will adopt our technology and products, or that prospective customers will agree to pay for our products. In the event that we are not able to significantly increase the number of customers that purchase our products, or if we are unable to charge the necessary prices, our financial condition and results of operations will be materially and adversely affected.

If health care providers are unable to obtain sufficient reimbursement or other financial incentives from third-party health care payers related to the use of our products other than Quell, their adoption and our future product sales will be materially adversely affected.

Widespread adoption of our diagnostic products by the medical community is unlikely to occur without a financial incentive from third-party payers for the use of these products. If health care providers are unable to obtain adequate reimbursement for procedures performed using these products, and if managed care organizations do not receive improved capitated payments due to more accurate patient risk assessment using our products, we may be unable to sell our products at levels that are sufficient to allow us to achieve and maintain profitability, and our business would suffer significantly. Additionally, even if these products and procedures are adequately reimbursed by third-party payers today, adverse changes in payers future policies toward payment would harm our ability to market and sell our products. Third-party payers include governmental programs such as Medicare and Medicaid, private health insurers, workers’ compensation programs and other organizations.

Future regulatory action by CMS or other governmental agencies or negative clinical results may diminish reimbursement payments to physicians for performing procedures using our products. Medicaid reimbursement differs from state to state, and some state Medicaid programs may not cover the procedures performed with our products or pay physicians an adequate amount for performing those procedures, if at all. Additionally, some private payers do not follow the Medicare guidelines and may reimburse for only a portion of these procedures or not at all. We are unable to predict what changes will be made in the reimbursement methods used by private or governmental third-party payers. ~~Importantly, we cannot predict~~

The clinical study process is lengthy and expensive with uncertain outcomes. Results of earlier studies may not be predictive of future clinical study results, or the ~~effects that implementation~~safety profile for such products or products under development.

Clinical testing is difficult to design and implement, can take many years, can be expensive, and carries uncertain outcomes. The results of clinical studies of our products conducted to date and ongoing or future studies of our current, planned, or future products and product candidates may not be predictive of the ~~Patient Protection~~results of later clinical studies, and ~~Affordable Care Act~~interim results of a clinical study do not necessarily predict final results. Our interpretation of data and results from our clinical studies do not ensure that we will achieve similar results in future clinical studies. In addition, clinical data is often susceptible to various interpretations and analyses, and many companies that have ~~on CMS, commercial insurers, health care providers,~~believed their products performed satisfactorily in clinical studies have nonetheless failed to replicate results in later clinical studies. Products in later stages of clinical studies may fail to show the desired safety and ~~ultimately on our business.~~efficacy despite having progressed through nonclinical studies. Failure can occur at any stage of clinical testing. Our clinical studies may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in addition to those we have planned.

We ~~are subject~~rely on third parties to ~~extensive regulation by the FDA~~conduct our clinical trials and perform data collection and analysis, which ~~could restrict the sales~~may result in costs and ~~marketing of the Quell and DPNCheck devices and the ADVANCE System, as well as other products for which we may seek FDA clearance or approval, and could cause~~delays that prevent us ~~to incur significant costs.~~from successfully commercializing our product candidates.

We ~~sell~~rely on contract research organizations, medical ~~devices that are subject~~institutions, clinical investigators, and contract laboratories to ~~extensive regulation in~~perform data collection and analysis and other aspects of our clinical trials. Our clinical trials may be delayed, suspended, or terminated if: the ~~United States~~quality or accuracy of the data obtained by the ~~FDA with regard~~third parties on whom we rely is compromised due to ~~manufacturing, labeling, sale, promotion, distribution, shipping and ongoing monitoring and follow-up. Before a new medical device,~~their failure to adhere to our clinical protocols or ~~a new use of~~regulatory requirements or ~~claim~~if for ~~an existing product, can~~other reasons, these third parties do not successfully carry out their contractual duties or fail to meet regulatory obligations or expected deadlines, or these third parties need to be marketed in the United States, it must first be cleared or approved by the FDA. Medical devices may be marketed only for the indications for which they are approved or cleared. The regulatory review process can be expensive and lengthy. The FDA’s process for granting 510(k) clearance typically takes approximately three to six months, but it can be significantly longer. The process for obtaining a pre-market approval, or PMA, is much more costly and onerous. By law, the time period designated for the FDA’s review of a PMA is 180 days; however, this time is often extended and it is not uncommon for the PMA review process to take three years or longer from the time the application is filed with the FDA.replaced.

~~The FDA~~If the third parties on whom we rely fail to perform, our development costs may ~~remove~~increase, and our ~~devices from~~ability to obtain regulatory approval and commercialize our product candidates may be delayed or prevented altogether. We currently support medical institutions who are conducting clinical trials related to our products. While we believe that there are alternative approaches to these medical institutions, in the ~~market or enjoin them from commercial distribution if safety or effectiveness problems develop. Further,~~event that we seek such alternative sources we may not be able to ~~obtain~~enter into replacement arrangements without delays or incurring additional 510(k) clearances or pre-market approvals for new products or for modifications to, or additional indications for, our existing products in a timely fashion, or at all. Delays in obtaining future clearances or approvals would adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our revenue and future profitability. We have made modifications to our devices in the past and may make additional modifications in the future that we believe do not or will not require additional clearances or approvals. If the FDA disagrees, and requires new clearances or approvals for the modifications, we may be required to recall and to stop marketing the modified devices. If any of these events occurs or if the FDA takes other enforcement actions, we may not be

~~able to provide our customers with the products they require on a timely basis, our reputation could be harmed, and we could lose customers and suffer reduced revenues and increased costs.~~

We also are subject to numerous post-marketing regulatory requirements, including the FDA’s quality system regulations, which relate to the design, manufacture, packaging, labeling, storage, installation and servicing of our products, labeling regulations, medical device reporting regulations and correction and removal reporting regulations. Our failure or the failure by any manufacturer of our products to comply with applicable regulatory requirements could result in enforcement action by the FDA. FDA enforcement actions relating to post-marketing regulatory requirements or other issues may include any of the following:

•~~warning letters, untitled letters, fines, injunctions, product seizures, consent decrees and civil penalties;~~

•~~requiring repair, replacement, refunds, customer notifications or recall of our products;~~

•~~imposing operating restrictions, suspension or shutdown of production;~~

•~~refusing our requests for 510(k) clearance or PMA approval of new products, new intended uses, or modifications to existing products;~~

•~~requesting voluntary rescission of 510(k) clearances or withdrawing PMA approvals that have already been granted; and~~

•~~criminal prosecution.~~

~~If any of these events were to occur, they could harm our reputation, our ability to generate revenues and our profitability.~~

Also, from time to time, legislation is introduced into Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of medical devices. FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations changed, and what the impact of such changes, if any, may be. The FDA has publicly stated that it is reevaluating its longstanding 510(k) review program. It is not clear when, or if, the program will be modified and what effect the modified review process will have on our ability to bring our product candidates to market.expenses.

We depend on several single source manufacturers to produce components of our products. Any material adverse changes in our relationships with these manufacturers, or material supply chain delays, could prevent us from delivering products to our customers in a timely manner and may adversely impact our future revenues or costs.

We rely on third-party manufacturers to manufacture components of our Quell, DPNCheck and ADVANCE systems. In the event that our manufacturers cease to manufacture sufficient quantities of our products or components in a timely manner and on terms acceptable to us, we would be forced to locate alternate manufacturers. Additionally, if our manufacturers experience a failure in their production process, are unable to obtain sufficient quantities of the components necessary to manufacture our products, experience extraordinary price increases on parts essential to our products or otherwise fail to meet our quality requirements, we may be forced to delay the manufacture and sale of our products or to locate an alternative manufacturer. We may be unable to locate suitable alternative manufacturers for our products or components for which the manufacturing process is relatively specialized, on terms acceptable to us, or at all. While we have long-standing relationships with our primary suppliers for device components, electrodes and biosensors, these suppliers are, in turn, dependent on other manufacturers of electronic parts and components, and are therefore subject to ~~supply/~~supply and demand risks of the electronic parts and components marketplace, and the potential for parts obsolescence. As a result, there is a risk that certain parts and components could be in short supply at a time when required by us or they could be discontinued and no longer available to us.

We have experienced, ~~transient~~from time to time, inventory shortages on our products and essential parts. If any materially adverse changes in our relationships with ~~these~~ manufacturers or parts suppliers occur, our ability to supply our customers will be severely limited until we are able to engage an alternate manufacturer or parts supplier or, if applicable, resolve any quality issues with our existing manufacturer. This situation could prevent us from delivering products to our customers in a timely manner, lead to decreased sales or increased costs, or harm our reputation with our customers.

If our manufacturers are unable to supply us with an adequate supply of product components, we could lose customers, our potential future growth could be limited and our business could be harmed.

In order for us to successfully expand our business, our contract manufacturers must be able to provide us with substantial quantities of components of our products in compliance with regulatory requirements, in accordance with agreed upon

specifications, at acceptable cost and on a timely basis. Our potential future growth could strain the ability of our manufacturers to deliver products and obtain materials and components in sufficient quantities. Manufacturers often experience difficulties in scaling up production, including problems with production yields and quality control and assurance. If we are unable to obtain sufficient quantities of ~~high quality~~high-quality products to meet customer demand on a timely basis, we could lose customers, our growth may be limited and our business could be harmed.

The success of our business depends upon our ability to advance our pipeline products to commercialization.

We commenced commercialization of Quell in June 2015 and we completed a DPNCheck product upgrade during 2022. We have additional product candidates and enhancements of our existing products in our R&D pipeline. We expect that advancing our pipeline products will require significant time and resources. We may not be successful in our commercialization efforts for any of the product candidates or product enhancements currently in our pipeline and we may not be successful in developing, acquiring, or in licensing additional product candidates, to the extent we decide to do so. If we are not successful in advancing new products through our development pipeline, the regulatory process and commercial launch, our business, financial condition, and results of operations will be adversely affected.

Our ability to achieve profitability depends in part on maintaining or increasing our gross margins on product sales which we may not be able to achieve.

A number of factors may adversely impact our gross margins on product sales and services, including:

•shortages of electronic components resulting in higher prices or an inability to supply key parts;

•low production volume which will result in high levels of overhead cost per unit of production;

•increased material or labor costs;

•increased service or warranty costs or the failure to reduce service or warranty costs;

•increased price competition;

•variation in the margins across products in a particular period; and

•how well we execute on our strategic and operating plans.

If we are unable to maintain or increase our gross margins on product sales, our results of operations could be adversely impacted, we may not achieve profitability and our stock price could decline.

If we lose any of our officers or key employees, our management and technical expertise could be weakened significantly.

Our success largely depends on the skills, experience, and efforts of our executive officers, Shai N. Gozani, M.D., Ph.D., our founder, Chairman, President and Chief Executive Officer, and Thomas T. Higgins, our Senior Vice President and Chief Financial Officer. We do not maintain key person life insurance policies covering any of our employees. The loss of either of our executive officers could weaken our management and technical expertise significantly and harm our business.

If we are unable to recruit, hire and retain skilled and experienced personnel, our ability to manage and expand our business will be harmed, which would impair our future revenues and profitability.

We are a small company with 26 employees as of December 31, 2023, and our ability to retain our skilled labor force and our success in attracting and hiring new skilled employees will be a critical factor in determining our future performance. We may not be able to meet our future hiring needs or retain existing personnel, particularly given the challenges faced by our business. We will face challenges and risks in hiring, training, managing and retaining engineering and sales and marketing employees. Failure to attract and retain personnel, particularly technical and sales and marketing personnel would materially harm our ability to compete effectively and grow our business.

Failure to develop or enter into relationships to sell products other than our existing products or enhance our existing products could have an adverse effect on our business prospects.

Our future business and financial success will depend, in part, on our ability to effectively market our products, including Quell and DPNCheck, and to enhance these products in response to customer demand and feedback. Developing new products and upgrades to existing and future products imposes burdens on our research and development department and our management. This process is costly, and we cannot assure you that we will be able to successfully develop new products or enhance our current products. We also may not be able to enter into relationships with other companies to sell additional products. In addition, as we develop the market for our products, future competitors may develop desirable product features earlier than we do which could make our competitors’ products less expensive or more effective than our products and could render our products obsolete or unmarketable. If our product development efforts are unsuccessful, we will have incurred significant costs without recognizing the expected benefits and our business prospects may suffer.

If we are unable to develop new products or enhance existing products, we may be unable to attract or retain customers.

Our success depends on the successful development, regulatory clearance or approval (if required), introduction and commercialization of new generations of products, treatment systems, and enhancements to and/or simplification of existing products. Quell and DPNCheck must keep pace with, among other things, the products of our competitors. We are making significant investments in long-term growth initiatives. Such initiatives require significant capital commitments, involvement of senior management and other investments on our part, which we may be unable to recover. Our timeline for the development of new products or enhancements may not be achieved and price and profitability targets may not prove feasible. Commercialization of new products may prove challenging, and we may be required to invest more time and money than expected to successfully introduce them. Once introduced, new products may adversely impact orders and sales of our existing products, or make them less desirable or even obsolete. Compliance with regulations, competitive alternatives, and shifting market preferences may also impact the successful implementation of new products or enhancements.

Our ability to successfully develop and introduce new products and product enhancements, and the revenues and costs associated with these efforts, may be affected by our ability to:

•properly identify customer needs;

•prove feasibility of new products in a timely manner;

•educate physicians about the use of new products and procedures;

•comply with internal quality assurance systems and processes timely and efficiently;

•comply with regulatory requirements relating to our products, and limit the timing and cost of obtaining required regulatory approvals or clearances;

•accurately predict and control costs associated with inventory overruns caused by phase-in of new products and phase-out of old products;

•price new products competitively;

•manufacture and deliver our products in sufficient volumes on time, and accurately predict and control costs associated with manufacture of the products; and

•meet our product development plan and launch timelines.

Even if customers accept new products or product enhancements, the revenues from these products may not be sufficient to offset the significant costs associated with making them available to customers. Failure to successfully develop, obtain regulatory approval or clearance for, manufacture or introduce new products or to complete these processes in a timely and efficient manner could result in delays that could affect our ability to attract and retain customers, or could cause customers to delay or cancel orders, causing our backlog, revenues and operating results to suffer.

We currently compete, and may in the future need to compete, against other medical device and consumer companies with greater resources, more established distribution channels and other competitive advantages, and the success of these competitors may harm our ability to generate revenues.

nerve conduction study and electromyography equipment including Cadwell Laboratories, Inc. and Natus Medical Incorporated. These companies enjoy significant competitive advantages, including:

•greater resources for product development, sales and marketing;

•more established distribution networks;

•greater name recognition;

•more established relationships with health care professionals, customers and third-party payers; and

•additional lines of products and the ability to offer rebates or bundle products to offer discounts or incentives.

As we develop the market for wearable technology for chronic pain, we will be faced with competition from other companies that decide and are able to enter the market as well as competition from other forms of treatment for chronic pain. Some or all of our future competitors in the diagnostic nerve testing market and the chronic pain market may enjoy competitive advantages such as those described above. If we are unable to compete effectively against existing and future competitors, our sales will decline and our business will be harmed.

Cybersecurity incidents, security breaches and other disruptions could compromise our information, hinder our ability to perform essential activities, and expose us to financial claims and liabilities, which could cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data in our data centers, on our networks, including intellectual property, our proprietary business information, and that of our customers, suppliers and business partners, and personally identifiable information of our employees. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions.Similar risks exist with respect to our business partners and third-party providers, including suppliers, software and cloud-based service providers, that we rely upon for aspects of our information technology support services and certain administrative functions. Any such incident or breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence in our products and services, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

If future clinical studies or other articles are published, or physician associations or other organizations announce positions that are unfavorable to our products, our sales efforts and revenues may be negatively affected.

Future clinical studies or other articles regarding our existing products or any competing products may be published that either support a claim, or are perceived to support a claim, that a competitor’s product is more accurate or effective than our products or that our products are not as accurate or effective as we claim or previous clinical studies have concluded. Additionally, physician associations or other organizations that may be viewed as authoritative or have an economic interest in nerve conduction studies and in related electrodiagnostic procedures or other procedures that may be performed using our products or in neurostimulation therapies using our devices could endorse products or methods that compete with our products or otherwise announce positions that are unfavorable to our products. Any of these events may negatively affect our sales efforts and result in decreased revenues.

If we expand in foreign markets, we will be affected by new business risks that may adversely impact our financial condition or results of operations.

Foreign markets represented approximately 20% and 14% of our revenues in 2023 and 2022, respectively. We are evaluating future expansion, particularly in Asia. Any such expansion will subject us to the possibility of new business risks, including:

•failure to fulfill foreign regulatory requirements, if applicable, to market our products;

•availability of, and changes in, reimbursement within prevailing foreign health care payment systems;

•adapting to the differing business practices and laws in foreign countries;

•difficulties in managing foreign relationships and operations, including any relationships that we establish with foreign distributors or sales or marketing agents;

•limited protection for intellectual property rights in some countries;

•difficulty in collecting accounts receivable and longer collection periods;

•costs of enforcing contractual obligations in foreign jurisdictions;

•recessions in economies outside of the United States;

•political instability and unexpected changes in diplomatic and trade relationships;

•currency exchange rate fluctuations; and

•potentially adverse tax consequences.

If we are successful in introducing our products into foreign markets, we will be affected by these additional business risks, which may adversely impact our financial condition or results of operations. In addition, expansion into foreign markets imposes additional burdens on our executive and administrative personnel, research and sales departments, and general managerial resources. Any efforts to introduce our products into foreign markets may not be successful, in which case we may have expended significant resources without realizing the expected benefit.

Risks Related to Government Regulation and Other Legal Compliance Matters

We are subject to extensive regulation by the FDA and other federal and state regulators which could restrict the sales and marketing of Quell, DPNCheck and ADVANCE, as well as other products for which we may seek FDA clearance or approval, and could cause us to incur significant costs.

We sell medical devices that are subject to extensive regulation in the United States by the FDA with regard to manufacturing, labeling, sale, promotion, distribution, shipping and ongoing monitoring and follow-up. Before a new medical device, or a new use of or claim for an existing product, can be marketed in the United States, it must first be cleared or approved by the FDA. Medical devices may be marketed only for the indications for which they are approved or cleared. The regulatory review process can be expensive and lengthy. The FDA’s process for granting 510(k) clearance typically takes approximately three to six months, and for De Novo clearance approximately five months to one year. However, in both cases it can be significantly longer. The process for obtaining a PMA is much more costly and onerous. By law, the time period designated for the FDA’s review of a PMA is 180 days; however, this time is often extended and it is not uncommon for the PMA review process to take three years or longer from the time the application is filed with the FDA.

The FDA may remove our devices from the market or enjoin them from commercial distribution if safety or effectiveness problems develop. Further, we may not be able to obtain additional 510(k) clearances, De Novo clearances or pre-market approvals for new products or for modifications to, or additional indications for, our existing products in a timely fashion, or at all. Delays in obtaining future clearances or approvals would adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our revenue and future profitability. We have made modifications to our devices in the past and may make additional modifications in the future that we believe do not or will not require additional clearances or approvals. If the FDA disagrees, and requires new clearances or approvals for the modifications, we may be required to recall and to stop marketing the modified devices. If any of these events occurs or if the FDA takes other enforcement actions, we may not be able to provide our customers with the products they require on a timely basis, our reputation could be harmed, and we could lose customers and suffer reduced revenues and increased costs.

We also are subject to numerous post-marketing regulatory requirements, including the FDA’s (i) quality system regulations, which relate to the design, manufacture, packaging, labeling, storage, installation and servicing of our products; (ii) labeling regulations, medical device reporting regulations; and (iii) correction and removal reporting regulations. Third-party pharmacies, including online pharmacies, and other distributors of our products may also be subject to federal, state and local licensing, accreditation and other regulatory requirements. Our failure or the failure by any manufacturer, pharmacy or distributor of our products to comply with applicable regulatory requirements could result in enforcement action by the FDA or other regulators or it could result in delays in the distribution of our products. FDA enforcement actions relating to post-marketing regulatory requirements or other issues may include any of the following:

•warning letters, untitled letters, fines, injunctions, product seizures, consent decrees and civil penalties;

•requiring repair, replacement, refunds, customer notifications or recall of our products;

•imposing operating restrictions, suspension or shutdown of production;

•refusing our requests for 510(k) clearance or PMA approval of new products, new intended uses, or modifications to existing products;

•requesting voluntary rescission of 510(k) clearances or withdrawing PMA approvals that have already been granted; and

•criminal prosecution.

If any of these events were to occur, they could harm our reputation, our ability to generate revenues and our profitability.

If we or our manufacturers fail to comply with the FDA’s quality system regulation, the manufacturing and distribution of our products could be interrupted, and our product sales and operating results could suffer.

We and our contract manufacturers are required to comply with the FDA’s ~~quality system regulation, or~~ QSR which is a complex regulation that governs the procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our devices. The FDA enforces the QSR through periodic inspections. We cannot assure you that our facilities or the facilities of the manufacturers of our products would pass any future inspection. If our facilities or any of the facilities of the manufacturers of our products fail an inspection, the manufacturing or distribution of our products could be interrupted and our operations disrupted. Failure to take adequate and timely corrective action in response to an adverse inspection could result in a suspension or shutdown of our packaging and labeling operations and the operations of the manufacturers of our products or a recall of our products, or other administrative or judicial sanctions. If any of these events occurs, we may not be able to provide our customers with the quantity of products they require on a timely basis, our reputation could be harmed, and we could lose customers and suffer reduced revenues and increased costs.

We are subject to Federal Trade Commission regulatory oversight. Exercise of this regulatory oversight could lead to an outcome which would constrain our marketing of Quell, cause us to incur significant costs and penalties, and adversely affect our financial results.

Under the ~~Federal Trade Commission~~FTC Act, ~~(FTC Act),~~ the FTC is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; and (c) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative or judicial penalties, including civil penalties, or injunctions affecting the manner in which we would be able to market Quell in the future.

The previously reported investigation by the Federal Trade Commission (the “Commission”) regarding Quell® advertising was settled in March 2020. The Company did not admit to any of the Commission's allegations, agreed to certain modifications of Quell advertising claims, and pledged to pay to the Commission future commercial milestone payments, if and when received, pursuant to a collaboration agreement with a third party.

Our products may be subject to recalls, even after receiving FDA clearance or approval, which would harm our reputation, business and financial results.

We are subject to the medical device reporting regulations, which require us to report to the FDA if our products may have caused or contributed to a death or serious injury, or have malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to occur. We are also subject to the correction and removal reporting regulations, which require us to report to the FDA any field corrections and device recalls or removals that we undertake to reduce a risk to health posed by the device or to remedy a violation of the Federal Food, Drug and Cosmetic Act ~~or FDCA,~~(FDCA) caused by the device which may present a risk to health. In addition, the FDA and similar governmental agencies in other countries have the authority to require the recall of our products if there is a reasonable probability that the products would cause serious adverse health consequences or death. A government-mandated or voluntary recall by us could occur as a result of manufacturing defects, labeling deficiencies, packaging defects or other failures to comply with applicable regulations. Any recall would divert management attention and financial resources and harm our reputation with customers and could have a material adverse effect on our financial condition and results of operations.

1823

~~The success of~~We are subject to federal and state laws prohibiting “kickbacks” and false or fraudulent claims, which, if violated, could subject us to substantial penalties. Additionally, any challenge to or investigation into our ~~business depends upon~~practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our ~~ability to advance our pipeline products to commercialization.~~business.

A federal law commonly known as the federal anti-kickback law, and several similar state laws, prohibit the payment of any remuneration that is intended to induce physicians or others either to refer patients or to acquire or arrange for or recommend the acquisition of health care products or services. These laws constrain a medical device company’s sales, marketing and other promotional activities by limiting the kinds of business relationships and financial arrangements, including sales programs we may have with hospitals, pharmacies (including online pharmacies), physicians or other potential purchasers of medical devices. Other federal and state laws generally prohibit individuals or entities from knowingly presenting, or causing to be presented, claims for payment to Medicare, Medicaid or other third-party payers that are false or fraudulent, or for items or services that were not provided as claimed. We ~~commenced commercialization~~rely on third-party health care organizations, pharmacies (including online pharmacies) and distributors to fulfill orders of ~~Quell~~our products. In addition, from time to time, we may provide coding and billing information as product support to purchasers of our products. Our relationships with health care organizations, pharmacies and other third parties could be scrutinized under federal and state health care laws such as the anti-kickback laws. Anti-kickback and false claims laws prescribe civil and criminal penalties for noncompliance, which can be quite substantial including exclusion from participation in ~~June 2015~~federal health care programs. A number of states have enacted laws that require pharmaceutical and medical device companies to monitor and report payments, gifts and other remuneration made to physicians and other health care professionals and health care organizations. Some state statutes, such as the one in Massachusetts, impose an outright ban on gifts to physicians. These laws are often referred to as “gift ban” or “aggregate spend” laws and carry substantial fines if they are violated. Similar legislation, known as the Physician Payments Sunshine Act, was enacted by Congress in 2014. In the event that we are found to have violated these laws or determine to settle a claim that we have done so, our business may be materially adversely affected as a result of any payments required to be made, restrictions on our future operations or actions required to be taken, damage to our business reputation or adverse publicity in connection with such a finding or settlement or other adverse effects relating thereto. Additionally, even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respond to, and thus could harm our business and results of operations.

If we are found to have violated laws protecting the confidentiality of patient health information, we could be subject to civil or criminal penalties, which could increase our liabilities, damage our reputation and harm our business.

There are a number of federal and state laws protecting the confidentiality of individually identifiable patient health information, including patient records, and restricting the use and disclosure of that protected information. In particular, the U.S. Department of Health and Human Services promulgated patient privacy rules under the Health Insurance Portability and Accountability Act of 1996. These privacy rules protect medical records and other personal health information by limiting their use and disclosure, giving individuals the right to access, amend and seek accounting of their own health information and limiting most use and disclosures of health information to the minimum amount reasonably necessary to accomplish the intended purpose. Any failure or perceived failure by us or any third-party distributors, pharmacies, service providers, contractors or consultants to comply with privacy, confidentiality, data security or similar obligations, or any data security incidents or other security breaches that result in the accidental, unlawful or unauthorized access to, use of, release of, or transfer of sensitive information, may result in negative publicity, harm to our reputation, governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties, including class action lawsuits, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations.

The use of our products could result in product liability claims that could be expensive, damage our reputation and harm our business.

Our business exposes us to an inherent risk of potential product liability claims related to the manufacturing, marketing and sale of medical devices. The medical device industry historically has been litigious, and we ~~initiated a DPNCheck~~face financial exposure to product ~~upgrade during 2019. We have additional product candidates and enhancements~~liability claims if the use of our ~~existing~~ products inwere to cause or contribute to injury or death. Our products may be susceptible to claims of injury because their use involves the electric stimulation of a patient’s nerves. Although we maintain product liability insurance for our ~~R&D pipeline, including~~products and other commercial insurance, the ~~planned DPNCheck Generation 2 product. We expect that advancing our pipeline products will require significant time and resources. We~~coverage limits of these policies may not be ~~successful in our commercialization efforts for any of the~~adequate to cover future claims. We may be unable to maintain sufficient product ~~candidates~~liability or ~~product enhancements currently in our pipeline~~other commercial insurance on acceptable terms or at reasonable costs, and wethis insurance may not beprovide us with adequate coverage against potential liabilities. A successful claim brought against us in ~~developing, acquiring,~~excess of, or ~~in-licensing additional product candidates, to the extent we decide to do so. If we are not successful advancing new products through~~outside of, our ~~development pipeline, the regulatory process and commercial launch,~~insurance coverage could have a material adverse effect on our ~~business,~~ financial condition and results of ~~operations will be adversely affected.~~operations. A product liability claim, regardless of its merit or eventual outcome, could result in

substantial costs to us, a substantial diversion of management attention and adverse publicity. A product liability claim could also harm our reputation and result in a decline in revenues and an increase in expenses.

Our ~~ability to achieve profitability depends~~products are complex in ~~part on maintaining or increasing our gross margins on product sales which we~~design, and defects may not be ~~able~~discovered prior to ~~achieve.~~shipment to customers, which could result in warranty obligations or product liability or other claims, reducing our revenues and increasing our costs and liabilities.

~~A number~~We depend upon third parties for the manufacture of ~~factors~~our products or components. Our products, particularly our electrodes, require a significant degree of technical expertise to produce. If these manufacturers fail to produce our products to specification, or if the manufacturers use defective materials or workmanship in the manufacturing process, the reliability and performance of our products will be compromised.

If our products contain defects that cannot be repaired quickly, easily and inexpensively, we may ~~adversely impact our gross margins on product sales and services, including:~~experience:

•~~lower than expected manufacturing yields~~loss of ~~high cost components leading to increased manufacturing costs;~~customer orders and delay in order fulfillment;

•~~shortages of electric components resulting in higher prices or an inability~~damage to ~~supply key parts;~~

•~~low production volume which will result in high levels of overhead cost per unit of production;~~

•~~the timing of revenue recognition and revenue deferrals;~~our brand reputation;

•increased ~~material~~cost of our warranty program due to product repair or ~~labor costs;~~replacement;

•~~increased service or warranty costs or the failure~~inability to ~~reduce service or warranty costs;~~attract new customers;

•~~increased price competition;~~

•~~variation in the margins across products in a particular period;~~diversion of resources from our manufacturing and research and development departments into our service department; and

•~~how well we execute on~~legal action.

The occurrence of any one or more of the foregoing could harm our ~~strategic~~reputation and ~~operating plans.~~

~~If we are unable to maintain or~~materially reduce our revenues and increase our ~~gross margins on product sales, our results of operations could be adversely impacted, we may not achieve profitability~~costs and ~~our stock price could decline.~~liabilities.

Risks Related to Our Intellectual Property

The patent rights we rely upon to protect the intellectual property underlying our products may not be adequate, which could enable third parties to use our technology and would harm our ability to compete in the market.

Our success will depend in part on our ability to develop or acquire commercially valuable patent rights and to protect these rights adequately. The risks and uncertainties that we face with respect to our patents and other related rights include the following:

•the pending patent applications we have filed or to which we have exclusive rights may not result in issued patents or may take longer than we expect to result in issued patents;

•the claims of any patents that are issued may not provide meaningful protection;

•we may not be able to develop additional proprietary technologies that are patentable;

•other parties may challenge patents, patent claims or patent applications licensed or issued to us; and

•other companies may design around technologies we have patented, licensed or developed.

Our issued and filed patents for our wearable therapeutic products are recent. With regard to our legacy neurodiagnostic products, our issued design patents began to expire in 2015, and our issued utility patents began to expire in 2017. In particular, seven of our issued U.S. utility patents covering various aspects of the legacy neurodiagnostic business expired on the same day in 2017. Although the patent protection for material aspects of these products covered by the claims of the patents were lost at that time, we have additional patents and patent applications directed to other novel inventions that have patent terms extending ~~beyond 2020.~~into 2024 and beyond.

In addition, the laws of other countries may not protect our patent rights to the same extent as the laws of the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Many companies have encountered significant difficulties in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, including certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to medical devices, which could make it difficult for us to stop the infringement of our patent rights or the marketing of competing products in violation of our

intellectual property and proprietary rights generally. For this or other reasons, we may not pursue or obtain patent protection in all major markets or may not obtain protection that enables us to prevent the entry of third parties onto the market.

Additionally, proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, ~~could~~ put our patents at risk of being invalidated or interpreted narrowly, ~~could~~ put our patent applications at risk of not issuing and ~~could~~ provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Further, many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected.

In addition, our patent rights underlying our products may not be adequate, and our competitors or customers may design around our proprietary technologies or independently develop similar or alternative technologies or products that are equal or superior to our technology and products without infringing on any of our patent rights. In addition, the patents licensed or issued to us may not provide a competitive advantage. If any of these events were to occur, our ability to compete in the market would be harmed.

Other rights and measures we have taken to protect our intellectual property may not be adequate, which would harm our ability to compete in the market.

In addition to patents, we rely on a combination of trade secrets, copyright and trademark laws, confidentiality, nondisclosure and assignment of invention agreements and other contractual provisions and technical measures to protect our intellectual property rights. We rely on trade secrets to protect the technology and algorithms we use in our customer data processing and warehousing information system. While we currently require employees, consultants and other third parties to enter into confidentiality, non-disclosure or assignment of invention agreements or a combination thereof where appropriate, any of the following could still occur:

•the agreements may be breached or not enforced in a particular jurisdiction;

•we may have inadequate remedies for any breach;

•trade secrets and other proprietary information could be disclosed to our competitors; or

•others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technologies.

If, for any of the above reasons, our intellectual property is disclosed or misappropriated, it would harm our ability to protect our rights and our competitive position.

We may need to initiate lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive and, if we lose, could cause us to lose some of our intellectual property rights, which would harm our ability to compete in the market.

We rely on patents to protect a portion of our intellectual property and our competitive position. Patent law relating to the scope of claims in the technology fields in which we operate is still evolving and, consequently, patent positions in the medical device industry are generally uncertain. In order to protect or enforce our patent rights, we may initiate patent litigation against third parties, such as infringement suits or interference proceedings. Litigation may be necessary to:

•assert claims of infringement;

•enforce our patents;

•protect our trade secrets or know-how; or

•determine the enforceability, scope and validity of the proprietary rights of others.

Any lawsuits that we initiate could be expensive, take significant time and divert management’s attention from other business concerns. Litigation also puts our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing. Additionally, we may provoke third parties to assert claims against us. We may not prevail in

any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially valuable. The occurrence of any of these events could harm our business, our ability to compete in the market or our reputation.

Claims that our products infringe on the proprietary rights of others could adversely affect our ability to sell our products and increase our costs.

Substantial litigation over intellectual property rights exists in the medical device industry. We expect that our products could be increasingly subject to third-party infringement claims as the number of competitors grows and the functionality of products and technology in different industry segments overlap. Third parties may currently have, or may eventually be issued, patents on which our products or technologies may infringe. Any of these third parties might make a claim of infringement against us. Any litigation regardless of its impact would likely result in the expenditure of significant financial resources and the diversion of management’s time and resources. In addition, litigation in which we are accused of infringement may cause negative publicity, adversely impact prospective customers, cause product shipment delays or require us to develop non-infringing technology, make substantial payments to third parties, or enter into royalty or license agreements, which may not be available on acceptable terms, or at all. If a successful claim of infringement were made against us and we could not develop non-infringing technology or license the infringed or similar technology on a timely and cost-effective basis, our revenues may decrease substantially and we could be exposed to significant liability.

~~We are subject~~Risks Related to federal and state laws prohibiting “kickbacks” and false or fraudulent claims, which, if violated, could subject us to substantial penalties. Additionally, any challenge to or investigation into our practices under these laws could cause adverse publicity and be costly to respond to, and thus could harm our business.Our Common Stock

A federal law commonly known as the federal anti-kickback law, and several similar state laws, prohibit the payment of any remuneration that is intended to induce physicians or others either to refer patients or to acquire or arrange for or recommend the acquisition of health care products or services. These laws constrain a medical device company’s sales, marketing and other promotional activities by limiting the kinds of business relationships and financial arrangements, including sales programs we may have with hospitals, physicians or other potential purchasers of medical devices. Other federal and state laws generally prohibit individuals or entities from knowingly presenting, or causing to be presented, claims for payment to Medicare, Medicaid or other third-party payers that are false or fraudulent, or for items or services that were not provided as claimed. From time to time, we may provide coding and billing information as product support to purchasers of our products. Anti-kickback and false claims laws prescribe civil and criminal penalties for noncompliance, which can be quite substantial including exclusion from participation in federal health care programs. A number of states have enacted laws that require pharmaceutical and medical device companies to monitor and report payments, gifts and other remuneration made to physicians and other health care professionals and health care organizations. Some state statutes, such as the one in Massachusetts, impose an outright ban on gifts to physicians. These laws are often referred to as “gift ban” or “aggregate spend” laws and carry substantial fines if they are violated. Similar legislation, known as the Physician Payments Sunshine Act, was enacted by Congress during 2014. In the event that we are found to have violated these laws or determine to settle a claim that we have done so, our business may be materially adversely affected as a result of any payments required to be made, restrictions on our future operations or actions required to be taken, damage to our business reputation or adverse publicity in connection with such a finding or settlement or other adverse effects relating thereto. Additionally, even an unsuccessful challenge or investigation into our practices could cause adverse publicity, and be costly to respond to, and thus could harm our business and results of operations.

~~The use of our products could result in product liability claims that could be expensive, damage our reputation and harm our business.~~

Our business exposes us to an inherent risk of potential product liability claims related to the manufacturing, marketing and sale of medical devices. The medical device industry historically has been litigious, and we face financial exposure to product liability claims if the use of our products were to cause or contribute to injury or death. Our products may be susceptible to claims of injury because their use involves the electric stimulation of a patient’s nerves. Although we maintain product liability insurance for our products and other commercial insurance, the coverage limits of these policies may not be adequate to cover future claims. We may be unable to maintain sufficient product liability or other commercial insurance on acceptable terms or at reasonable costs, and this insurance may not provide us with adequate coverage against potential liabilities. A successful claim brought against us in excess of, or outside of, our insurance coverage could have a material adverse effect on our financial condition and results of operations. A product liability claim, regardless of its merit or eventual outcome, could result in substantial costs to us, a substantial diversion of management attention and adverse publicity. A product liability claim could also harm our reputation and result in a decline in revenues and an increase in expenses.

Our products are complex in design, and defects may not be discovered prior to shipment to customers, which could result in warranty obligations or product liability or other claims, reducing our revenues and increasing our costs and liabilities.

We depend upon third parties for the manufacture of our products or components. Our products, particularly our electrodes, require a significant degree of technical expertise to produce. If these manufacturers fail to produce our products to specification, or if the manufacturers use defective materials or workmanship in the manufacturing process, the reliability and performance of our products will be compromised.

~~If our products contain defects that cannot be repaired quickly, easily and inexpensively, we may experience:~~

•~~loss of customer orders and delay in order fulfillment;~~

•~~damage to our brand reputation;~~

•~~increased cost of our warranty program due to product repair or replacement;~~

•~~inability to attract new customers;~~

•~~diversion of resources from our manufacturing and research and development departments into our service department; and~~

•~~legal action.~~

~~The occurrence of any one or more of the foregoing could harm our reputation and materially reduce our revenues and increase our costs and liabilities.~~

~~If we lose any of our officers or key employees, our management and technical expertise could be weakened significantly.~~

~~If we are unable to recruit, hire and retain skilled and experienced personnel, our ability to manage and expand our business will be harmed, which would impair our future revenues and profitability.~~

We are a small company with 20 employees as of December 31, 2020, and our ability to retain our skilled labor force and our success in attracting and hiring new skilled employees will be a critical factor in determining our future performance. We may not be able to meet our future hiring needs or retain existing personnel, particularly given the challenges faced by our business. We will face challenges and risks in hiring, training, managing and retaining engineering and sales and marketing employees. Failure to attract and retain personnel, particularly technical and sales and marketing personnel would materially harm our ability to compete effectively and grow our business.

~~Failure to develop or enter into relationships to sell products other than our existing products or enhance our existing products could have an adverse effect on our business prospects.~~

Our future business and financial success will depend, in part, on our ability to effectively market our products, including DPNCheck and Quell, and to enhance these products in response to customer demand. Developing new products and upgrades to existing and future products imposes burdens on our research and development department and our management. This process is costly, and we cannot assure you that we will be able to successfully develop new products or enhance our current products. We also may not be able to enter into relationships with other companies to sell additional products. In addition, as we develop the market for our products, future competitors may develop desirable product features earlier than we do which could make our competitors’ products less expensive or more effective than our products and could render our products obsolete or unmarketable. If our product development efforts are unsuccessful, we will have incurred significant costs without recognizing the expected benefits and our business prospects may suffer.

~~If we are unable to develop new products or enhance existing products, we may be unable to attract or retain customers.~~

Our success depends on the successful development, regulatory clearance or approval (if required), introduction and commercialization of new generations of products, treatment systems, and enhancements to and/or simplification of existing products. DPNCheck and Quell must keep pace with, among other things, the products of our competitors. We are making significant investments in long-term growth initiatives. Such initiatives require significant capital commitments, involvement of senior management and other investments on our part, which we may be unable to recover. Our timeline for the development of new products or enhancements may not be achieved and price and profitability targets may not prove feasible. Commercialization of new products may prove challenging, and we may be required to invest more time and money than expected to successfully introduce them. Once introduced, new products may adversely impact orders and sales of our existing products, or make them less desirable or even obsolete. Compliance with regulations, competitive alternatives, and shifting market preferences may also impact the successful implementation of new products or enhancements.

~~Our ability to successfully develop and introduce new products and product enhancements, and the revenues and costs associated with these efforts, may be affected by our ability to:~~

•~~properly identify customer needs;~~

•~~prove feasibility of new products in a timely manner;~~

•~~educate physicians about the use of new products and procedures;~~

•~~comply with internal quality assurance systems and processes timely and efficiently;~~

•~~comply with regulatory requirements relating to our products, and limit the timing and cost of obtaining required regulatory approvals or clearances;~~

•~~accurately predict and control costs associated with inventory overruns caused by phase-in of new products and phase-out of old products;~~

•~~price new products competitively;~~

•~~manufacture and deliver our products in sufficient volumes on time, and accurately predict and control costs associated with manufacture of the products; and~~

•~~meet our product development plan and launch timelines.~~

We currently do, and in the future may need to, compete directly and indirectly with a number of other companies that may have competitive advantages over us. Our diagnostic devices for nerve testing compete with companies that sell traditional nerve conduction study and electromyography equipment including Cadwell Laboratories, Inc. and Natus Medical Incorporated. These companies enjoy significant competitive advantages, including:

•~~greater resources for product development, sales and marketing;~~

•~~more established distribution networks;~~

•~~greater name recognition;~~

•~~more established relationships with health care professionals, customers and third-party payers; and~~

•~~additional lines of products and the ability to offer rebates or bundle products to offer discounts or incentives.~~

As we develop the market for wearable technology for chronic pain, we will be faced with competition from other companies that decide and are able to enter the market as well as competition from other forms of treatment for chronic pain. Some or all of our future competitors in the diagnostic nerve testing market and the consumer market for pain relief may enjoy competitive advantages such as those described above. If we are unable to compete effectively against existing and future competitors, our sales will decline and our business will be harmed.

~~Security breaches and other disruptions could compromise our information and expose us to liability, which could cause our business and reputation to suffer.~~

In the ordinary course of our business, we collect and store sensitive data in our data centers, on our networks, including intellectual property, our proprietary business information, and that of our customers, suppliers and business partners, and personally identifiable information of our employees. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence in our products and services, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

~~As we expand into foreign markets, we will be affected by new business risks that may adversely impact our financial condition or results of operations.~~

Foreign markets represented approximately 15% and 13% of our revenues in 2020 and 2019, respectively. We are working to expand market penetration, particularly in Asia. Any such expansion will subject us to the possibility of new business risks, including:

•~~failure to fulfill foreign regulatory requirements, if applicable, to market our products;~~

•~~availability of, and changes in, reimbursement within prevailing foreign health care payment systems;~~

•~~adapting to the differing business practices and laws in foreign countries;~~

•~~difficulties in managing foreign relationships and operations, including any relationships that we establish with foreign distributors or sales or marketing agents;~~

•~~limited protection for intellectual property rights in some countries;~~

•~~difficulty in collecting accounts receivable and longer collection periods;~~

•~~costs of enforcing contractual obligations in foreign jurisdictions;~~

•~~recessions in economies outside of the United States;~~

•~~political instability and unexpected changes in diplomatic and trade relationships;~~

•~~currency exchange rate fluctuations; and~~

•~~potentially adverse tax consequences.~~

If we are successful in introducing our products into foreign markets, we will be affected by these additional business risks, which may adversely impact our financial condition or results of operations. In addition, expansion into foreign markets imposes additional burdens on our executive and administrative personnel, research and sales departments, and general managerial resources. Our efforts to introduce our products into foreign markets may not be successful, in which case we may have expended significant resources without realizing the expected benefit.

Future sales of securities may cause our stock price to decline as a result of the dilution which will occur to existing stockholders.

Until such time as we are profitable, as to which we can make no assurance, we ~~will~~may need ~~significant~~ additional funds to develop our business and sustain our operations. We have sold shares of common stock, convertible preferred stock and warrants on several occasions in the past, and any additional sales of shares of our common stock or other securities exercisable into our common stock are likely to have a dilutive effect on some or all of our then existing stockholders. Resales of newly issued shares in the open market could also have the effect of lowering our stock price, thereby increasing the number of shares we may need to issue in the future to raise the same dollar amount and consequently further diluting our outstanding shares.

The perceived risk associated with the possible sale of a large number of shares could cause some of our stockholders to sell their stock, thus causing the price of our stock to decline. In addition, actual or anticipated downward pressure on our stock price due to actual or anticipated issuances or sales of stock could cause some institutions or individuals to engage in short sales of our common stock, which may itself cause the price of our stock to decline.

If our stock price declines, weit may be ~~unable~~difficult to raise additional ~~capital. A sustained inability to raise~~ capital and it could ~~force us to go out of business. Significant declines in the price of our common stock could also~~ impair our ability to attract and retain qualified employees, reduce the liquidity of our common stock, and result in the delisting of our common stock from ~~The Nasdaq Stock Market LLC, or~~ Nasdaq.

The trading price of our common stock has been volatile and is likely to be volatile in the future.

The trading price of our common stock has been highly volatile. For the two-year period ended December 31, ~~2020,~~2023, our stock price has fluctuated from a low of ~~$0.81~~$3.05 to a high of ~~$13.80, as adjusted for stock splits during that time.~~$59.28. The market price for our common stock will be affected by a number of factors, including:

•the denial or delay of regulatory clearances or approvals for our products under development or receipt of regulatory approval of competing products;

•our ability to accomplish clinical, regulatory and other product development and commercialization milestones and to do so in accordance with our timing estimates;

•changes in policies affecting third-party coverage and reimbursement in the United States and other countries;

•changes in government regulations and standards affecting the medical device industry and our products;

•ability of our products to achieve market success;

•the performance of third-party contract manufacturers and component suppliers;

•actual or anticipated variations in our results of operations or those of our competitors;

•announcements of new products, technological innovations or product advancements by us or our competitors;

•developments with respect to patents and other intellectual property rights;

•sales of common stock or other securities by us or our stockholders in the future;

•additions or departures of key scientific or management personnel;

•disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

•trading volume of our common stock;

•regulatory inquiries or developments affecting our products;

•changes in earnings estimates or recommendations by securities analysts, failure to obtain or maintain analyst coverage of our common stock or our failure to achieve analyst earnings estimates;

•public statements by analysts or clinicians regarding their perceptions of our clinical results or the effectiveness of our products;

•decreases in market valuations of medical device companies; and

•general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors.

The stock prices of many companies in the medical device industry have experienced wide fluctuations that have often been unrelated to the operating performance of these companies. Periods of volatility in the market price of a company’s securities can result in securities class action litigation against a company. If class action litigation is initiated against us, we may incur substantial costs and our management’s attention may be diverted from our operations, which could significantly harm our business.

We have, in the past, failed to satisfy certain continued listing requirements on Nasdaq and could fail to satisfy those requirements again in the future which could affect the market price of our common stock and liquidity and reduce our ability to raise capital.

~~Currently,~~We have, in the past, failed to satisfy certain continued listing requirements on Nasdaq. For example, as previously disclosed, on August 8, 2023, we received a deficiency letter from the Nasdaq Listing Qualifications Department notifying us that because the closing bid price of our common stock had fallen below $1.00 per share for 30 consecutive business days, we no longer met the bid price requirement. We were able to regain compliance with the minimum bid price requirement within the prescribed 180-day compliance period by effecting a reverse stock split, and currently, our common stock trades on the Nasdaq Capital Market. During 2019 we received notification from Nasdaq informing us of certain listing deficiencies related to the minimum bid price listing requirements. Although we have since cured the deficiency, it is possible that we could fall out of compliance again in the future. IfNasdaq. However, if we fail to maintain compliance with any Nasdaq listing requirements in the future, including minimum bid price for our common stock, we could be delisted and our stock would be considered a penny stock under regulations of the ~~Securities and Exchange Commission, or~~ SEC and would therefore be subject to rules that impose additional sales practice requirements on broker-dealers who sell our securities. The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of our common stock and your ability to sell our securities in the secondary market.

The long-term effects of our recently completed reverse stock split on the market price of our common stock cannot be predicted with any certainty, and shares of our common stock have likely experienced decreased liquidity as a result of the reverse stock split.

On November 21, 2023, we effected a reverse stock split of the Company’s common stock, at a ratio of 1-for-8, to comply with Nasdaq’s minimum bid price requirement. The liquidity of our common stock has likely been adversely affected and may continue to be adversely affected by the reverse stock split given the reduced number of shares of our common stock that are now outstanding following the reverse stock split, particularly if the market price of our common stock does not increase from its recent decline after the reverse stock split. As a result of the lower number of shares outstanding following the reverse stock split, the market for our common stock may also become more volatile, which may lead to reduced trading and a smaller number of market makers for our common stock. The reverse stock split also increased the number of stockholders who own “odd lots” of less than 100 shares of common stock. A purchase or sale of less than 100 shares of common stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own fewer than 100 shares of common stock following the reverse stock split may be required to pay higher transaction costs if they sell their common stock.

There can be no assurance that our share prices will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. The trading liquidity of our common stock may not improve.

Anti-takeover provisions in our organizational documents and Delaware law, and the shareholder rights plan that we adopted in 2007 and updated in 2021, may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.

Our certificate of incorporation and bylaws contain provisions that could delay or prevent a change of control of our Company or changes in our Board of Directors that our stockholders might consider favorable. Some of these provisions:

•authorize the issuance of preferred stock which can be created and issued by the Board of Directors without prior stockholder approval, with rights senior to those of our common stock;

•provide for a classified Board of Directors, with each director serving a staggered three-year term;

•prohibit our stockholders from filling board vacancies, calling special stockholder meetings, or taking action by written consent;

•provide for the removal of a director only with cause and by the affirmative vote of the holders of 75% or more of the shares then entitled to vote at an election of our directors; and

•require advance written notice of stockholder proposals and director nominations.

We have also adopted a shareholder rights plan that could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, us or a large block of our common stock. A third party that acquires 15% or more of our common stock could suffer substantial dilution of its ownership interest under the terms of the shareholder rights plan through the issuance of common stock to all stockholders other than the acquiring person.

In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These and other provisions in our certificate of incorporation, bylaws and Delaware law could make it more difficult for stockholders or potential acquirers to obtain control of our Board of Directors or initiate actions that are opposed by our then-current Board of Directors, including a merger, tender offer, or proxy contest involving our Company. Any delay or prevention of a change of control transaction or changes in our Board of Directors could cause the market price of our common stock to decline.

We do not intend to pay cash dividends.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. ~~In addition, the terms of our credit facility preclude us from paying any dividends.~~ As a result, capital appreciation, if any, of our common stock will be our stockholders’ sole source of potential gain for the foreseeable future.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

We operate in the medical device industry, which is subject to various cybersecurity risks that could adversely affect our business, financial condition, and results of operations, including intellectual property theft; fraud; extortion; harm to employees or customers; violation of privacy laws and other litigation and legal risk; and reputational risk. We have initiated a risk-based approach designed to identify and assess the cybersecurity threats that could affect our business and information systems. Our strategy is to maintain a high level of risk awareness, identify critical IT assets, regularly update or replace those assets, and systematically perform vulnerability testing, and to promptly remediate deficiencies. Our cybersecurity program is aligned with industry standards and best practices, such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework.

We are adopting various tools and methodologies to manage cybersecurity risk that will be tested on a regular cadence. We are also in the process of monitoring and evaluating our cybersecurity posture and performance on an ongoing basis through scheduled vulnerability scans, penetration tests and threat intelligence feeds. We require third-party service providers with access to personal, confidential or proprietary information to implement and maintain comprehensive cybersecurity practices consistent with applicable legal standards and industry best practices.

Our business depends on the availability, reliability, and security of our information systems, networks, data, and intellectual property. Any disruption, compromise, or breach of our systems or data due to a cybersecurity threat or incident could adversely affect our operations, customer service, product development, and competitive position. They may also result in a breach of our contractual obligations or legal duties to protect the privacy and confidentiality of our stakeholders. Such a breach could expose us to business interruption, lost revenue, ransom payments, remediation costs, liabilities to affected parties, cybersecurity protection costs, lost assets, litigation, regulatory scrutiny and actions, reputational harm, customer dissatisfaction, harm to our vendor relationships, or loss of market share.

Our Board of Directors, the Audit Committee and the Cyber Committee, which is chaired by the Chief Executive Officer and staffed by the IT Director, Chief Financial Officer, Corporate Controller and other management employees, are responsible for overseeing cybersecurity risks and risk management. The Board has assigned oversight responsibility for cybersecurity to the Audit Committee, which is in regular communication with management concerning cybersecurity threats and incidents. The Audit Committee reviews management assessment of cyber controls, control testing and outcomes. The Audit Committee is responsible for keeping the Board informed of significant cybersecurity developments including incidents which might potentially have a material effect on the Company. The Cyber Committee is responsible for evaluating cyber threats, the potential effect on operations and scope of the threat. Threats or incidents which the Cyber Committee has judged to have potentially material consequences will be communicated to the Audit Committee. A meeting of the full Board of Directors, including the Audit Committee, will be convened within 48 hours of the Cyber Committee assessment. If the Board determines that the threat or incident is material, Form 8-K will be finalized and filed within four days following the determination, as required under SEC rules.

The Company is currently in the process of implementing a more formalized cybersecurity program.

ITEM 2. PROPERTIES

Our headquarters, engineering activities, and manufacturing and fulfillment activities are located in an approximately 10,000 square foot leased facility in Woburn, Massachusetts. We believe this facility will be adequate for our needs during the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

~~While we are~~The Company is not ~~currently a~~ party to or aware of any ~~material~~ legal ~~proceedings, we could become subject to legal proceedings in the ordinary course of business. We do not expect any such potential items to have a significant impact on our financial position.~~proceedings.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

2830

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is traded on the Nasdaq Capital Market under the symbol “NURO”.

Stockholders

On ~~January 27, 2021,~~February 29, 2024, there were approximately 2542 stockholders of record of our common stock. This number does not include stockholders for whom shares were held in a “nominee” or “street” name. On ~~January 27, 2021,~~February 29, 2024, the last reported sale price per share of our common stock on the Nasdaq Capital Market was ~~$4.40.~~$4.06.

~~EQUITY COMPENSATION PLAN INFORMATION~~Unregistered Sales of Securities

The following table sets forth information as of December 31, 2020 regarding the number of securities to be issued upon exercise, and the weighted average exercise price of outstanding options, warrants, and rights under our equity compensation plans and the number of securities available for future issuance under our equity compensation plans.Not applicable

Issuer Purchases of Equity ~~Compensation Plan Information as of December 31, 2020~~Securities

Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights Weighted average
exercise price of
outstanding
options, warrants
and rights Number of
securities remaining
available for future
issuance under
equity
compensation plans
(excluding
securities reflected
in column a)
(a) (b) (c)
Equity compensation plans approved by security holders(1)
361,956 $ 3.68 53,356 (2)
Equity compensation plans not approved by security holders(3)
— — 1,250
Totals 361,956 $ 3.68 54,606

~~(1)~~Includes information related to our Amended and Restated 1996 Stock Option/Restricted Stock Plan, Amended and Restated 1998 Equity Incentive Plan, Eleventh Amended and Restated 2004 Stock Option and Incentive Plan, and Fourth Amended and Restated 2010 Employee Stock Purchase Plan.

~~(2)~~As of December 31, 2020, there were 53,356 shares available for future grant under the Eleventh Amended and Restated 2004 Stock Option and Incentive Plan and no shares available under the Fourth Amended and Restated 2010 Employee Stock Purchase Plan.

~~(3)~~Includes information related to our Amended and Restated 2009 Non-Qualified Inducement Stock Plan, which is designed to provide equity grants to new employees. Pursuant to this plan, we were authorized to issue Non-Qualified Stock Options, Restricted Stock Awards and Unrestricted Stock Awards.

Not applicable

ITEM 6. ~~SELECTED FINANCIAL DATA~~[RESERVED]

~~The information required by this item may be found on pages F-1 through F-21 of this Annual Report on Form 10-K.~~

3031

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations in conjunction with our selected financial data, our financial statements, and the accompanying notes to those financial statements included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. For a description of factors that may cause our actual results to differ materially from those anticipated in these forward-looking statements, please refer to the section titled “Risk Factors”, contained in Item 1A of this Annual Report on Form 10-K.

~~Overview~~Our Business

NeuroMetrix ~~develops~~is a commercial stage neurotechnology company based in Woburn, Massachusetts. The Company’s mission is to improve individual and ~~commercializes~~population health ~~care products that utilize non-invasive neurostimulation. Our core expertise in biomedical engineering has been refined over two decades of designing, building and marketing~~through innovative medical devices ~~that stimulate nerves~~ and ~~analyze nerve response~~technology solutions for ~~diagnostic~~neurological disorders and ~~therapeutic purposes.~~chronic pain management. We ~~created the market for point-of-care nerve testing and were first to market with sophisticated wearable technology for symptomatic relief of chronic pain. Our business is~~are fully integrated with in-house capabilities spanning research and development, manufacturing, regulatory affairs and compliance, sales and marketing, product fulfillment and customer support. We ~~derive revenues~~hold extensive, proprietary intellectual property.

NeuroMetrix created the market for point-of-care nerve testing and introduced sophisticated wearable technology for chronic pain syndromes. Nearly five million patients have been served with our products. Revenue is derived from the sale of medical devices and after-market consumable products and ~~accessories. Our products are sold~~accessories in the United States and select overseas markets. ~~They~~Products are ~~cleared~~authorized by the ~~U.S. Food and Drug Administration (FDA)~~FDA and regulators in foreign jurisdictions where appropriate. We have two principal product categories:

•~~Point-of-care neuropathy diagnostic tests~~Therapeutic technology – wearable neuromodulation for chronic pain syndromes

•~~Wearable neurostimulation devices~~

~~Peripheral neuropathies, also called polyneuropathies, are diseases of the peripheral nerves.~~They affect about 10% of adults in the United States, with the prevalence rising to 25-50% among individuals 65 years and older. Peripheral neuropathies are associated with loss of sensation, pain, increased risk of falling, weakness, and other complications. People with peripheral neuropathies have a diminished quality of life, poor overall health and higher mortality. The most common specific cause of peripheral neuropathies, accounting for about one-third of cases, is diabetes. Diabetes is a worldwide epidemic with an estimated affected population of over 400 million people. Within the United States there are over 30 million people with diabetes and another 80 million with pre-diabetes. The annual direct cost of treating diabetes in the United States exceeds $100 billion. Although there are dangerous acute manifestations of diabetes, the primary burden of the disease is in its long-term complications, which include cardiovascular disease, nerve disease and resulting conditions such as foot ulcers which may require amputation, eye disease leading to blindness, and kidney failure. The most common long-term complication of diabetes, affecting over 50% of the diabetic population is peripheral neuropathy. DiabeticDiagnostic technology - point-of-care peripheral neuropathy (DPN) is the primary trigger for diabetic foot ulcers, which may progress to the point of requiring amputation. People with diabetes have a 15-25% lifetime risk of foot ulcers and approximately 15% of foot ulcers lead to amputation. Foot ulcers are the most expensive complication of diabetes with a typical cost of $5,000 to $50,000 per episode. In addition, between 16% and 26% of people with diabetes suffer from chronic pain in the feet and lower legs.assessment

Early detection of peripheral neuropathies, such as DPN, is important because there are no treatment options once the nerves have degenerated. Today’s diagnostic methods for peripheral neuropathies range from a simple monofilament test for lack of sensory perception in the feet to a nerve conduction study performed by a specialist. Our DPNCheck nerve conduction technology provides a rapid, low cost, quantitative test for peripheral neuropathies, including DPN. It addresses an important unmet medical need and is particularly effective in screening large populations. ~~DPNCheck~~This technology has been ~~validated~~evaluated in ~~numerous~~multiple clinical ~~studies.~~studies and marketed to domestic MA healthcare providers and insurers and in the Asian markets of Japan and China. MA has historically contributed the majority of DPNCheck revenue and been the driver of product-line growth.

In early 2023, the CMS proposed significant changes to its MA HCC risk adjustment payments and to its MA RADV audit practices. These changes created significant uncertainty in the market among participating healthcare providers and insurers. Subsequently, CMS confirmed that RADV changes would be implemented immediately and applied retroactively, and that changes in HCC payments would be phased in over a three-year period. The changes to HCC risk factor coding significantly reduced CMS payments for population screening for various conditions, including for neuropathy. During 2023, we experienced a significant reduction in MA sales revenue as a result of these CMS reimbursement changes. We reduced our commercial sales team while continuing to support our customer base and working to attract new accounts. However, it is unlikely that there will be a near-term recovery from the decline in revenue of the DPNCheck MA business. DPNCheck sales in Asian markets have remained consistent between the past two years and unaffected by the reimbursement changes in MA.

Chronic pain is a significant public health problem. It is defined by the ~~National Institutes of Health (NIH)~~NIH as pain lasting more than 12 weeks. This contrasts with acute pain which is a normal bodily response to injury or trauma. Chronic pain conditions include low back pain, arthritis, fibromyalgia, neuropathic pain, cancer pain and many others. Chronic pain may be triggered by an injury or there may be an ongoing cause such as disease or illness. There may also be no clear cause. Chronic pain can also lead to other health problems. These can include fatigue, sleep disturbance and mood changes, which cause difficulty in carrying out important activities and contributing to disability and despair. In general, chronic pain cannot be cured. Treatment of chronic pain is focused on reducing pain and improving function. The goal is effective pain management.

Chronic pain affects nearly 100 million adults in the United States and more than 1.5 billion people worldwide. The estimated incremental impact of chronic pain on health care costs in the United States is over $250 billion per year and lost productivity is estimated to exceed $300 billion per year. The most common approach to chronic pain management is pain medication. This includes over-the-counter (OTC) internal and external analgesics as well as prescription pain medications, both non-opioid and opioids. The approach to treatment is individualized, drug combinations may be employed, and the results are often inadequate. Side effects, including the potential for addiction are substantial. Increasingly, restrictions are being imposed on access to prescription opioids. Reflecting the complexity of chronic pain and the difficulty in treating it, we believe that inadequate relief leads 25% to 50% of pain sufferers to seek alternatives to prescription pain medications. These alternatives include nutraceuticals, acupuncture, chiropractic care, non-prescription analgesics, electrical stimulators, braces, sleeves, pads and other items. In total these pain relief products and services account for approximately $20 billion in annual out-of-pocket spending in the United States.

Nerve stimulation is a long-established category of treatment for chronic pain. This treatment approach is available through implantable devices which have both surgical and ongoing risks, such as migration of the implanted nerve stimulation leads. Non-invasive approaches involving ~~transcutaneous electrical nerve stimulation (TENS)~~TENS have achieved limited efficacy in practice due to power limitations, ~~ineffective~~inadequate dosing and low patient adherence. ~~We believe that~~

Quell is our ~~Quell~~ wearable neuromodulation technology for chronic ~~pain~~pain. We believe it is designed to address many of the limitations of traditional TENS. It has been refined over the past seven years with over 204,000 chronic pain patients and is protected by over 20 U.S. utility patents. Patients control and personalize the technology via a mobile phone app, and their utilization and certain clinical metrics may be tracked in the Quell Health Cloud. The degree of technological sophistication, combined with our extensive consumer experience and the compelling results of clinical studies gives us the opportunity to leverage this technology platform into a portfolio of Quell-based prescription (Rx) wearable neurotherapeutics.

The FDA granted Breakthrough Device Designation in 2021 for a Quell - Fibromyalgia indication. Following a pivotal double-blind, randomized, sham-controlled clinical study, FDA approved a De Novo marketing authorization in 2022 and Quell – Fibromyalgia, the first product of the emerging prescription portfolio, was launched.

Quell also received FDA Breakthrough Device Designation in early 2022 for the treatment of chronic CIPN. A CIPN double-blind, randomized, sham-controlled clinical study employing Quell and funded by the NCI and the NIH was completed in 2023 and a 510(k) application has been filed with FDA for marketing authorization for CIPN patients with moderate to severe neuropathic pain and cramps. Review and approval of the application by FDA could lead to market introduction of Quell - CIPN in late 2024. This would be the second product in our emerging portfolio of Quell-based prescription wearable therapeutics. We plan a similar approach to other disease indications involving chronic pain. These potentially include Fibromyalgia-like Long COVID, Chronic Low Back Pain, and COPC.

ADVANCE is a legacy, point-of-care neurodiagnostic technology primarily used for the diagnosis and screening for CTS. Manufacturing of ADVANCE devices was discontinued in 2012; however, we continue to service devices and provide disposable electrodes to a customer base of hand surgeons and manufacturers for industrial health use.

Results of Operations

Comparison of Years Ended December 31, ~~2020~~2023 and December 31, ~~2019~~2022


	Fiscal Year						Increase (Decrease)
	2023			2022			Amount		Percent

Revenues	$	5,901,425		$	8,256,073		$	(2,354,648)	(28.5)	%
Gross profit	$	3,947,413		$	5,750,240		$	(1,802,827)	(31.4)	%
–% of revenues	66.9		%	69.6		%
Operating expenses	$	11,098,934		$	10,492,006		$	606,928	5.8	%
Other income	$	622,034		$	325,157		$	296,877	91.3	%
Net loss	$	(6,529,487)		$	(4,416,609)		$	2,112,878	47.8	%
Net loss per share of common stock	$	(6.27)		$	(4.97)		$	1.30	26.2	%

Revenues

Years Ended December 31,
2020 2019 Change % Change
(in thousands)
Revenues $ 7,378.0 $ 9,272.5 $ (1,894.5) (20.4) %

Revenues for 2023 decreased by $2.4 million, or 28.5%, from 2023. DPNCheck contributed the majority of revenues in both years. It posted a revenue drop of 25.2% in 2023, primarily attributable to adverse CMS reimbursement changes in the Medicare Advantage market which created significant uncertainty among healthcare providers and reduced patient screening for various conditions, including for peripheral neuropathy. Also, 2023 was the first full year following the discontinuation of Quell (OTC) which we took off the market in Q4 2022. Sales of the Company’s first Rx indication, Quell – Fibromyalgia, partially offset the loss of Quell OTC sales. Legacy ADVANCE revenues continued to decline with erosion of its customer base.

Revenues include sales of Quell, DPNCheck and ADVANCE to physician offices, clinics, hospitals, other healthcare providers and insurers, domestic and international distributors and retail consumers. Revenues comprise sales of medical devices as well as aftermarket electrodes and other supplies. Revenues were $7.4 million and $9.3 million during the years ended December 31, 2020 and 2019, respectively. Revenues during the year ended December 31, 2020 were adversely affected by the economic effects of the COVID-19 pandemic. A recovery trend in customer orders and shipment volume was observed beginning late in the second quarter which continued during the second half of 2020. This trend particularly benefited DPNCheck sales in U.S. Medicare Advantage accounts.Gross Profit

~~Cost of Revenues~~Gross profit for 2023 decreased by $1.8 million or 31.4% from 2022 primarily due to the drop in DPNCheck sales. The gross margin rate contracted by 2.7 percentage points to 66.9% reflecting decreased production efficiency and ~~Gross Profit~~

Years Ended December 31,
2020 2019 Change % Change
(in thousands)
Cost of revenues $ 2,128.4 $ 7,026.9 $ (4,898.5) (69.7) %
Gross profit $ 5,249.6 $ 2,245.6 $ 3,004.0 133.8 %
higher unabsorbed costs relative to production volume.

Our gross profit margin was 71.2% in 2020 versus 24.2% in the prior year. The unusually low gross margin in 2019 reflected an inventory charge of $2.6 million as part of restructuring the Quell business. Excluding this charge, the gross margin rate in 2019 was 54.0%. The margin improvement in 2020 was due to improved profitability of Quell sales and higher weighting of DPNCheck business within total revenue.

Operating Expenses

Years Ended December 31,
2020 2019 Change % Change
(in thousands)
Operating expenses:
Research and development $ 2,391.3 $ 3,102.0 $ (710.7) (22.9) %
Sales and marketing 1,436.8 4,755.2 (3,318.4) (69.8) %
General and administrative 3,516.3 5,923.2 (2,406.9) (40.6) %
Total operating expenses $ 7,344.4 $ 13,780.4 $ (6,436.0) (46.7) %

~~Research and Development~~

Research and development expenses for 2020 decreased by 22.9% from 2019. GSK co-funded specific Quell development projects in the amounts of $0.4 million and $1.5 million in 2020 and 2019, respectively. The co-funding arrangement with GSK was not extended beyond 2020. In addition, personnel costs decreased by $0.6 million due to business restructuring.

~~Sales and Marketing~~

Sales and marketing expense for 2020 decreased by 69.8% from 2019 primarily attributable to reduced Quell advertising and trade show spending of $1.6 million. In addition, personnel costs decreased by $0.7 million due to business restructuring and professional services costs decreased by $0.8 million.

~~General and Administrative~~

General and administrative expense for 2020 decreased by 40.6% from 2019 due to lower professional service costs of $2.0 million. In addition, personnel costs decreased by $0.1 million due to business restructuring, which was offset with an increase in insurance costs of $0.2 million.

~~Collaboration income~~

Years Ended December 31,
2020 2019 Change % Change
(in thousands)
Collaboration income $ — $ 7,716.7 $ (7,716.7) (100.0) %

Collaboration income in 2019 included development milestones paid by GlaxoSmithKline (GSK) under a 2018 Quell collaboration agreement. The final development milestones were achieved in 2019. Cumulative development milestone payments from GSK during the 2018-2019 period were approximately $20.5 million.

~~Other Income~~

Years Ended December 31,
2020 2019 Change % Change
(in thousands)
Other income $ 2.7 $ 45.0 $ (42.3) (94.0) %

~~Other income primarily includes interest income.~~

Operating expenses increased in 2023 by $0.6 million or 5.8% from 2022. The net increase encompassed expansion of the Quell – Fibromyalgia sales team, inflation-related increases in personnel costs, higher professional fees offset by reduced outside engineering services.

Research and development spending in 2023 of $2.8 million decreased by 14.3% or $462 thousand from 2022, primarily due to a reduction in outside engineering support for Quell, a drop of $585 thousand from the prior year offset by increased personnel costs of $113 thousand. Sales and marketing spending of $3.4 million in 2023 increased by $500 thousand or 17.4% reflecting the addition of Quell headcount and personnel costs. General and administrative costs of $5.0 million increased by $569 thousand or 13% from 2022. Personnel costs (including equity compensation) increased by $398 thousand or 24.2% and professional services costs increased by $204 thousand or 44.7%.

Other Income

Other income reflects the effects of higher interest rates in 2023 on interest income from the Company's securities portfolio and its commercial bank account.

Net loss ~~per common share applicable to common stockholders, basic and diluted~~

Net loss ~~per common share applicable to common stockholders~~in 2023 was ~~$(0.69), basic and diluted for 2020. Net loss per common share applicable to common stockholders was $(3.90), basic and diluted for 2019. Weighted average shares outstanding used in computing~~$6.5 million or $6.27 per share ~~amounts are included~~of common stock versus a net loss in ~~Note 2 to the Financial Statements.~~2022 of $4.4 million, or $4.97 per share of common stock. Shares of common stock outstanding were 1,524,939 at December 31, 2023 versus 971,492 at December 31, 2022. The Company executed a one-for-eight reverse split of its common stock in November 2023.

Liquidity and Capital Resources

The following table contains certain key performance indicators we believe depict our liquidity and cash flow position:


	Years Ended December 31,
	2023		2022

Cash, cash equivalents and marketable securities	$	17,997,151	$	21,199,727
Working capital	$	19,613,803	$	23,000,575
Current ratio	16.8		21.8
Net debt position	$	(16,664,027)	$	(19,885,799)
Days sales outstanding	35.6		20.9
Inventory turnover	1.2		1.8

Our ~~principal source~~primary sources of liquidity isare cash, ~~of $5.2 million at December 31, 2020. Funding for our operations largely depends~~cash equivalents and marketable securities, collections on ~~revenues from the~~ sales of our ~~commercial products. A low level~~products, and net proceeds from equity sales. We believe that our resources are sufficient to fund our cash requirements over at least the next twelve months from the date of ~~market interest in our products, a decline in our consumables sales, or unanticipated increases in our operating costs, and the adverse effects~~issuance of the ~~COVID-19 pandemic could have an adverse effect on our liquidity and cash.~~

December 31,
2020 December 31,
2019 Change % Change
(in thousands)
Cash and cash equivalents $ 5,226.2 $ 3,126.2 $ 2,100.0 67.2 %
financial statements.

~~During 2020 our cash and cash equivalents increased by $2.1 million from 2019 reflecting net proceeds~~As of ~~$4.1 million from common stock sales under our ATM program partially offset by $2.1~~December 31, 2023, we had $18 million in cash, ~~used in operating activities. During 2020~~cash equivalents and marketable securities, working capital of $19.6 million, and a current ratio of 16.8. We had no term debt or borrowings at the ~~Company terminated its loan facility with~~end of 2023 and 2022, which contributed to a ~~commercial bank.~~negative net debt position at each year end. (Net debt position is defined as short-term and long-term financial obligations, less cash, cash equivalents and marketable securities.) These measures indicate adequate liquidity and capitalization of the company.

~~In managing working capital, we focus on two important financial measurements:~~

Years Ended December 31,
2020 2019
Days sales outstanding (days) 15.4 26.8
Inventory turnover rate (times per year) 1.9 3.5

Days sales outstanding (DSO) reflect our customer payment terms which vary from payment on order to 60 days from ~~invoice~~shipment date. The ~~decrease~~increase in DSO isin 2023 in comparison with the prior year reflects a greater weighting during 2023 of DPNCheck sales with terms of 30 to 60 days plus extended payment terms provided to a long-term DPNCheck customer related to a volume-based contract.Inventory turnover rate declined during 2023 due to ~~a shift in our~~reduced sales channel to payment-on-order Quell e-commerce sales. The inventory turnover rate decelerated to 1.9 turns in 2020 versus 3.5 turns in 2019. This reflected lower sales on approximately constant inventory levels in the comparable period.volume.

~~The following sets forth information relating to sources and uses of our cash:~~

Years Ended December 31,
2020 2019
(in thousands)
Net cash used in operating activities (excluding cash provided by collaboration income) (2,066.9) (11,338.0)
Net cash provided by collaboration income — 7,716.7
Net cash used in operating activities (2,066.9) (3,621.3)
Net cash used in investing activities — (48.1)
Net cash provided by financing activities 4,166.9 15.1

~~During 2020 our operating activities used approximately $2.1 million.~~

~~During the year ended December 31, 2020, our financing activities reflected approximately $4.2 million net proceeds from issuance of stock.~~

The Company has suffered recurring losses from operations and negative cash flows from operating activities. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the one-year period from the date

Cash Flows


	Years Ended December 31,
	2023		2022		Change

Net cash provided by (used in):
–Operating activities	$	(6,084,868)	$	(5,289,416)	$	(795,452)
–Investing activities	$	1,156,353	$	(16,811,699)	$	17,968,052
–Financing activities	$	2,325,441	$	3,864,031	$	(1,538,590)
Net decrease in cash and cash equivalents	$	(2,603,074)	$	(18,237,084)

Operating activities

Operations cash usage in 2023 increased by $0.8 million from 2022. This reflected an increased net loss of ~~issuance~~$2.1 million in 2023 partially offset by net reductions in non-cash elements of ~~these financial statements. The financial statements do not~~the net loss plus changes in operating assets and liabilities from 2022.

Investing activities

Proceeds from maturities of marketable securities, net of reinvestments and fixed asset purchases were $1.2 million in 2023. Investing activity in 2022 included the establishment of a portfolio of marketable securities as well as fixed asset purchases. Investing activities in 2022 include ~~any adjustments that might result~~cash deployment of cash reserves into marketable securities valued at $16.8 million. Fixed asset purchases were $184 thousand in 2023 and $23 thousand in 2022.

Financing activities

During 2023 we raised net proceeds of $2.3 million from the ~~outcome~~sale of ~~this uncertainty. We held~~shares of common stock, registered under a shelf registration statement, to investors utilizing an At-The-Market (ATM) facility and administered by an investment bank. This amount compared with $3.9 million raised under the ATM in 2022. The 2023 activity allowed us to offset a significant portion of our net cash usage in operations and to close the year with cash, cash equivalents and securities of $5.2 million as of December 31, 2020. We believe that these resources, and the cash to be generated from future product sales will be sufficient to meet our projected operating requirements through the fourth quarter of 2021. Accordingly, we will need to raise additional funds to support our operating and capital needs in the first quarter of 2022 and beyond.approximately $18 million.

We continue to face challenges and uncertainties. Among these uncertainties is the future effect on the Company's business of the COVID-19 pandemic which depressed sales of the Company's products during 2020. As a result, our available capital resources may be consumed more rapidly than currently expected due to (a) decreases in sales of our products related to COVID-19 pandemic and other factors including the uncertainty of future revenues from new products; (b) the effect of the COVID-19 pandemic on our ability to obtain parts and materials from our suppliers while continuing to staff critical production and fulfillment functions; (c) changes we may make to the business that affect ongoing operating expenses; (d) changes we may make in our business strategy; (e) regulatory developments affecting our existing products; (f) changes we may make in our research and development spending plans; and (g) other items affecting our forecasted level of expenditures and use of cash resources. We may attempt to obtain additional funding through public or private financing, collaborative arrangements with strategic partners, or other debt financing sources. However, we may not be able to secure such financing in a timely manner or on favorable terms, if at all.

~~We have~~maintain an effective shelf registration statement ~~on Form S-3 on file with the SEC~~ covering the sales of shares of our common stock and other securities, giving us the opportunity to raise funding when needed or otherwise considered appropriate at prices and on terms to be determined at the time of any such offerings. Pursuant to the instructions to Form S-3, we have the ability to sell shares under the shelf registration statement, during any 12-month period, in an amount less than or equal to one-third of the aggregate market value of our common stock held by non-affiliates. If we raise additional funds by issuing equity or debt securities, either through the sale of securities pursuant to a registration statement or by other means, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we raise additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to our potential products or proprietary technologies, or grant licenses on terms that are not favorable to us. Without additional funds, we may be forced to delay, scale back or eliminate some of our sales and marketing efforts, research and development activities, or other operations and potentially delay product development in an effort to provide sufficient funds to continue our operations. If any of these events occurs, our ability to achieve our development and commercialization goals would be adversely affected.

At December 31, 2020, the Company has federal net operating loss carryforwards (“NOL”) of approximately $143.7 million, of which $138.4 million begin to expire in 2021 and $5.3 million have an indefinite carryforward. At December 31, 2020, the Company has state NOLs of $53.1 million, some of which have an indefinite carryforward, and others that begin to expire in 2025. At December 31, 2020, the Company has federal and state tax credits of approximately $1.8 million and $1.1 million, respectively, which may be available to reduce future taxable income and related taxes thereon. These amounts include tax benefits of approximately $2.5 million and $75,000 attributable to NOL and tax credit carryforwards, respectively, that result from the exercise of employee stock options. The Company experienced an ownership change in 2019 as defined under Internal Revenue Service regulations, which significantly reduced the tax benefits associated with these carryforwards under Internal Revenue Code Sections 382 and 383. The federal NOLs, the state NOLs, and the federal and state research and development credits each began to expire in 2020. A full valuation allowance has been provided against our NOL carryforwards and research and development credit carryforwards. If an NOL or tax credit adjustment is required, it would be offset by a similar adjustment to the valuation allowance. Thus, NOL or tax credit adjustments would have no impact to the balance sheet or statement of operations.

Critical Accounting Policies and Estimates

Our financial statements are based on the selection and application of generally accepted accounting principles, which require us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and the accompanying notes. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ significantly from those estimates, and any such differences may be material to our financial statements. We believe that the policies set forth below may involve a higher degree of judgment and complexity in their application than our other accounting policies and represent the critical accounting policies used in the preparation of our financial statements. If different assumptions or conditions were to prevail, the results could be materially different from our reported results. Our significant accounting policies are presented within Note 2 to our Financial Statements.

~~Revenue Recognition and Accounts Receivable~~

Revenues include product sales, net of estimated returns. Revenue is measured as the amount of consideration the Company expects to receive in exchange for product transferred. Revenue is recognized when contractual performance obligations have been satisfied and control of the product has been transferred to the customer. In most cases, the Company has a single performance obligation for product delivery. Product returns are estimated based on historical data and evaluation of current information.

Revenue recognition involves judgments, including assessments of expected returns and expected customer relationship periods. We analyze various factors, including a review of specific transactions, historical product returns, average customer relationship periods, customer usage, customer balances, and market and economic conditions. Changes in judgments or estimates on these factors could materially impact the timing and amount of revenues and costs recognized. Should market or economic conditions deteriorate, our actual return or bad debt experience could exceed its estimate. Certain product sales are made with a 30-day or 60-day right of return.

~~Trade accounts receivable are recorded at the invoiced amount and do not bear interest.~~

Accounts receivable are recorded net of the allowance for doubtful accounts receivable. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We review our allowance for doubtful accounts and determine the allowance based on an analysis of customer past payment history, product usage activity, and recent communications between us and the customer. Individual customer balances which are past due and over 90 days outstanding are reviewed individually for collectability. Account balances are written-off against the allowance when we feel it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers.

Inventories

Inventories, consisting primarily of finished goods and purchased components, are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out inventory valuation method. We ~~write down~~perform an analysis of inventory valuation on at least a quarterly basis to determine whether the inventory carrying value exceeds its net realizable ~~value for excess or obsolete inventory. The~~value. Net realizable value ~~of inventories~~ is based ~~upon the types~~on current selling price and ~~levels of inventories held, forecasted demand, pricing, competition, and changes in technology. Our consumable electrodes and biosensors have an eighteen to thirty-six month shelf life.~~estimated future sales volume. Should ~~current~~ market ~~and economic~~ conditions deteriorate, our ~~actual recoveries~~inventory realization could be ~~less~~lower than ~~our estimates.~~

~~Leases~~

The Company presents the lease obligations on the balance sheet, by recording a right- of-use asset and a lease liability for all leases other than those that, at lease commencement, have a lease term of 12 months or less. On the lease commencement date, the Company is required to measure and record a lease liability equal to the present value of the remaining lease payments, discounted using the rate implicit in the lease or if that cannot be readily determined, the Company's incremental borrowing rate.

~~Income Taxes~~

The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company’s financial statements contain certain deferred tax assets, which have arisen primarily as a result of operating losses, as well as other temporary differences between financial and tax accounting. In accordance with the provisions of the Income Taxes topic of the Codification, the Company is required to establish a valuation allowance if the likelihood of realization of the deferred tax assets is reduced based on an evaluation of objective verifiable evidence. Significant management judgment is required in determining the Company’s provision for income taxes, the Company’s deferred tax assets and liabilities and any valuation allowance recorded against thoseestimated net deferred tax assets. The Company evaluates the weight of all available evidence to determine whether it is more likely than not that some portion or all of the net deferred income tax assets will not be realized.

Utilization of the NOL and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future, as provided by Section 382 of the IRS Code of 1986, as well as similar state provisions. Ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. If the Company has experienced a change of control, utilization of its NOL or tax credits carryforwards would be subject to an annual limitation under Section 382. Any limitation may result in expiration of a portion of the NOL or research and development credit carryforwards before utilization. Subsequent ownership changes could further impact the limitation in future years. Further, until a study is completed and any limitation known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s NOL carryforwards and research and development credit carryforwards and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheet or statement of operations if an adjustment were required.

Management performed a two-step evaluation of all tax positions, ensuring that these tax return positions meet the “more likely than not” recognition threshold and can be measured with sufficient precision to determine the benefit recognized in the financial statements. These evaluations provide management with a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements certain tax positions that the Company has taken or expects to take on income tax returns.

~~Research and Development~~

Costs incurred in research and development are expensed as incurred. Included in research and development costs are wages, benefits, product design consulting, and other operating costs such as facilities, supplies, and overhead directly related to the Company’s research and development efforts.

~~Collaboration income~~

Collaboration income is recognized within Other Income when contractual performance obligations, outside the ordinary activities of the Company, have been satisfied and control has been transferred to a collaboration partner. Collaboration income for each performance obligation is based on relative fair value of the overall transaction price. A deferred collaboration income liability is recorded when payments are received prior to satisfaction of performance obligations.

~~Product Warranty Costs~~

The Company accrues estimated product warranty costs at the time of sale which are included in cost of sales in the statements of operations. The amount of the accrued warranty liability is based on historical information such as past experience, product failure rates, number of units repaired, and estimated cost of material and labor. The liabilities for product warranty costs are included in accrued expenses and compensation in the accompanying balance sheets.

~~Fixed Assets and Long-Lived Assets~~

Fixed assets are recorded at cost and depreciated using the straight-line method over the estimated useful life of each asset. Expenditures for repairs and maintenance are charged to expense as incurred. On disposal, the related assets and accumulated depreciation are eliminated from the accounts and any resulting gain or loss is included in the Company’s statement of operations. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvement or the remaining term of the lease.

The Company periodically evaluates the recoverability of its fixed assets and other long-lived assets whenever events or changes in circumstances indicate that an event of impairment may have occurred. This periodic review may result in an adjustment of estimated depreciable lives or asset impairment. When indicators of impairment are present, the carrying values of the asset are evaluated in relation to the assets operating performance and future undiscounted cash flows of the underlying assets. If the future undiscounted cash flows are less than their book value, an impairment may exist. The impairment is measured as the difference between the book value and the fair value of the underlying asset. Fair values are based on estimates of the market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.

~~Accounting for Stock-Based Compensation~~

Stock-based compensation cost is generally recognized ratably over the requisite service period. The Company uses the Black-Scholes option pricing model for determining the fair value of its stock options and amortizes its stock-based compensation expense using the straight-line method. The Black-Scholes model requires certain assumptions that involve judgment. Such assumptions are the expected share price volatility, expected life of options, expected annual dividend yield, and risk-free interest rate.

~~Advertising and Promotional Costs~~

~~Advertising and promotional costs are expensed as incurred.~~realizable value.

Recently Issued or Adopted Accounting Pronouncements

~~Not Applicable.~~From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB") and are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently adopted and recently issued accounting pronouncements will not have a material impact on our balance sheets, results of operations and cash flows.

ITEM 8. Financial Statements and Supplementary Data

The information required by this item may be found on pages F-1 through F-21 of this Annual Report on Form 10-K.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

~~Not Applicable.~~None.

ITEM 9A. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-K, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Management’s Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal ~~control~~controls over financial reporting as of December 31, ~~2020~~2023 based on the criteria in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(“COSO”)~~(COSO). Based on our evaluation under the framework in Internal Control —– Integrated Framework (2013) issued by the COSO, our management concluded that our internal control over financial reporting was effective as of December 31, ~~2020.~~2023.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report ~~was~~is not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.

There have been no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during ~~the year ended December 31, 2020~~our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. Other Information

On ~~January 25, 2021,~~February 20, 2024, we entered into Amendment No. 1316 to our Shareholder Rights Agreement (“Amendment No. ~~13”~~16”) with ~~American Stock Transfer &~~Equiniti Trust Company, LLC dated as of March 7, 2007, as amended. Amendment No. 1316 extends the term of the Shareholder Rights Agreement by an additional year. The foregoing description of Amendment No. 1316 is subject to, and is qualified in its entirety by reference to, the full text of Amendment No. ~~13,~~16, a copy of which is set forth as Exhibit ~~4.3.14~~4.3.17 to this Annual Report on Form 10-K and is incorporated herein by reference.

Rule 10b5-1 Trading Plans

During the year ended December 31, 2023, no directors or executive officers entered into, modified or terminated, contracts, instructions or written plans for the sale or purchase of the Company’s securities that were intended to satisfy the affirmative defense conditions of Rule 10b5-1.

ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

3937

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

Information Regarding the Directors and Executive Officers

Name

Age

Position

Shai N. Gozani, M.D., Ph.D.

Chairman of the Board, Chief Executive Officer, President and Secretary

Thomas T. Higgins

Senior Vice President, Chief Financial Officer and Treasurer

Bradley M. Fluegel

Director

David E. Goodman, M.D.

Director

Nancy E. Katz

Director

David Van Avermaete

Director

Shai N. Gozani, M.D., Ph.D. founded our company in 1996 and currently serves as Chairman of our Board of Directors and as our President, Chief Executive Officer and Secretary. Since founding our company in 1996, Dr. Gozani has served in a number of positions at our company including Chairman since 1996, President from 1996 to 1998 and from 2002 to the present, Chief Executive Officer since 1997 and Secretary since July 2008. Dr. Gozani holds a B.A. in computer science, an M.S. in Biomedical Engineering and a Ph.D. in Neurobiology, from the University of California, Berkeley. He also received an M.D. from Harvard Medical School and the Harvard-M.I.T. Division of Health Sciences at M.I.T. Prior to forming our company, Dr. Gozani completed a neurophysiology research fellowship in the laboratory of Dr. Gerald Fischbach at Harvard Medical School. Dr. Gozani has published articles in the areas of basic and clinical neurophysiology, biomedical engineering and computational chemistry. Since 2019 Dr. Gozani has served on the Board of Directors of Madorra, Inc. The ~~response~~Board has concluded that Dr. Gozani should serve as a director because Dr. Gozani’s extensive knowledge of engineering and neurophysiology, combined with the unique understanding of our technology and business he has gained as our founder and as a key executive, provides invaluable insight to our Board and to the entire organization.

Bradley M. Fluegel has served as a member of our Board of Directors since June 2022. Since January 2018, Mr. Fluegel has been a principal of BMF Advisors, where he advises healthcare companies. He previously served as Senior Vice President, Chief Healthcare Commercial Market Development Officer of Walgreens from August 2015 to January 2018 and prior to that Chief Strategy Officer of Walgreens from September 2012 to August 2015. From April 2011 to September 2012, Mr. Fluegel served as Executive in Residence at Health Evolution Partners, a healthcare private equity firm. Mr. Fluegel served as Executive Vice President and Chief Strategy and External Affairs Officer of WellPoint, Inc. (now Elevance Health) from September 2007 to December 2010. Prior to that, Mr. Fluegel served as Senior Vice President of National Accounts and Vice President, Enterprise Strategy at Aetna, Inc. Mr. Fluegel currently serves on the board of directors of Performant Financial Corporation (Nasdaq: PFMT) and American Oncology Network (Nasdaq: AONC) and formerly served on the board of directors of Itamar Medical Ltd. prior to Zoll Medical's acquisition of the company and Fitbit, Inc. prior to Google’s acquisition of the company. Mr. Fluegel received an M.P.P.from Harvard University’s Kennedy School of Government and a B.A. in Business Administration from the University of Washington. He also serves as a lecturer at the University of Pennsylvania’s Wharton School of Business. Mr. Fluegel’s qualifications to serve on the Board include his extensive executive experience and his background in the healthcare industry.

David E. Goodman, M.D., M.S.E. has served as a member of our Board of Directors since June 2004. Since 2013, Dr. Goodman has been running his own independent primary care medical practice where he also manages the care of first responders (police, fire, EMS) injured in the line of duty. From 2013 to 2016, Dr. Goodman served as CEO of Feet First, a technology-focused healthcare services company he co-founded that is committed to preventing the devastating and expensive microvascular complications of diabetes. From 2014 to 2016, Dr. Goodman served as a director of Xtant Medical (OTC QX: BONE), a comprehensive supplier of orthopedic and spine surgery products. From 2012 to 2015, Dr. Goodman served as CMO of FirstVitals, a healthcare services company focused on wellness and prevention. Since 2011, Dr. Goodman has also served as an independent consultant. During 2010, Dr. Goodman served as President and Chief Executive Officer of SEDline, Inc., a research-focused company with the mission to expand the scope and applications for neuromonitoring. From 2008 to 2009, Dr. Goodman served as Executive Vice President of Business Development for Masimo Corporation, a manufacturer of non-invasive patient monitors. From 2006 to 2008, Dr. Goodman served as an independent consultant providing product design, regulatory and analytical consulting services to medical device and biopharmaceutical companies and also served in this

capacity from 2003 to 2004 and from 2001 to 2002. From 2005 to 2006, Dr. Goodman served as President and Chief Executive Officer of BaroSense, Inc., a medical device company focused on developing minimally invasive devices for the long-term treatment of obesity. From 2004 to 2005, Dr. Goodman served as President and Chief Executive Officer of Interventional Therapeutic Solutions, Inc., an implantable drug delivery systems company. From 2002 to 2003, Dr. Goodman served as Chairman, President and Chief Executive Officer of Pherin Pharmaceuticals, a pharmaceutical discovery and development company. From 1994 to 2001, Dr. Goodman held various positions, including Chief Executive Officer, Chief Medical Officer and director, for LifeMasters Supported SelfCare, Inc., a disease management services company that Dr. Goodman founded. Dr. Goodman also served as a director of Sound Surgical Technologies LLC, a private manufacturer of aesthetic surgical tools from 2011 until its acquisition by Solta Medical (Nasdaq:SLTM) in 2013. Dr. Goodman holds a B.A.S. in applied science and bioengineering and a M.S.E. in bioengineering from the University of Pennsylvania. He also received an M.D. from Harvard Medical School and the Harvard-M.I.T. Division of Health Sciences and Technology. Dr. Goodman holds 22 issued and pending patents and is a practicing physician with licenses in California and Hawaii. The Board has concluded that Dr. Goodman should serve as a director because Dr. Goodman’s medical and engineering background and his many years of executive experience in the medical device industry provide important experience and expertise to the Board.

Nancy E. Katz has served as a member of our Board of Directors since December 2010. From May 2011 to August 2014, Ms. Katz served as Vice President, Consumer Marketing at Medtronic, Inc., a medical technology company. From July 2005 to July 2010, Ms. Katz was Senior Vice President, Bayer Diabetes Care — North America. Prior to this position, she was President and Chief Executive Officer of Calypte Biomedical Corporation, a manufacturer of HIV diagnostics, President of Zila Pharmaceutical, Inc., a manufacturer of oral care products, and held senior marketing positions with the Lifescan division of Johnson & Johnson (blood glucose diabetes products), Schering-Plough Healthcare Products, and with American Home Products. Since October 2016, Ms. Katz has served on the Board of Directors of Cyanotech Corporation (Nasdaq: CYAN). She has previously served on the Boards of Directors of Neoprobe Corporation (AMEX: NEOP), Calypte Biomedical Corporation, LXN Corporation and Pepgen Corporation. She received a B.S. in business from the University of South Florida. The Board has concluded that Ms. Katz should serve as a director because of her executive level experience in the healthcare industry, as well as consumer marketing expertise which provides the Board with valuable insight in business strategy and execution.

David Van Avermaete has served as a member of our Board of Directors since September 2013. Since January 2015, Mr. Van Avermaete has served as President of Inject Safe Technologies, a privately held company that has developed a bandage specifically designed to support injections. From April 2004 to February 2013, Mr. Van Avermaete served as Chief Executive Officer of VeraLight, Inc., a medical device company he founded, that focuses on non-invasive screening for type 2 diabetes. From 2000 to 2004, Mr. Van Avermaete served as Senior Vice President Non-Invasive Technology of InLight Solutions, a Johnson & Johnson company focused on transformational technology in the diabetes field. From 1998 to 2000, Mr. Van Avermaete served as U.S. President of the LifeScan division of Johnson & Johnson and, from 1990 to 1998, in various senior level positions at LifeScan concentrating in sales and marketing. Previously, Mr. Van Avermaete served as Vice President Sales and Marketing at Biotope, Director of Marketing at Roche Diagnostics, and Director of Marketing and Sales at Syntex Medical Diagnostics. Mr. Van Avermaete received an M.B.A. and an M.S. in Microbiology from the University of Arizona and a Bachelor of Science Degree in medical technology and chemistry from Ball State University. The Board has concluded that Mr. Van Avermaete should serve as a director because his executive level experience in the medical device and diabetes field, as well as in entrepreneurial ventures, provides the Board with a valuable perspective in commercializing medical device products.

Thomas T. Higgins has served as our Senior Vice President, Chief Financial Officer and Treasurer since September 2009. Prior to joining NeuroMetrix, from January 2005 to March 2008, Mr. Higgins was Executive Vice President and Chief Financial Officer at Caliper Life Sciences, Inc., a provider of technology and services for life sciences research. Before Caliper, Mr. Higgins was Executive Vice President, Operations and Chief Financial Officer at V.I. Technologies, Inc. (Vitex), a biotechnology company addressing blood safety. Before Vitex, Mr. Higgins served at Cabot Corporation in various senior finance and operations roles. His last position at Cabot was President of Distrigas of Massachusetts Corporation, a subsidiary involved in the liquefied natural gas business, and prior to that he was Vice President and General Manager of Cabot’s Asia Pacific carbon black operations. Before joining Cabot, Mr. Higgins was with PricewaterhouseCoopers where he started his career. Mr. Higgins holds a B.B.A. with honors from Boston University.

Other information required by this item is incorporated by reference from the discussion responsive thereto under the captions ~~“Management~~“Board Matters and Corporate ~~Governance”~~Governance,” “Information Regarding the Directors and ~~“Corporate Code~~Executive Officers,” “Code of Business Conduct and Ethics” and “Delinquent Section 16(a) Reports” in our proxy statement for the ~~2021 annual meeting~~2024 Annual Meeting of ~~stockholders.~~Stockholders (the 2024 Proxy Statement).

ITEM 11. Executive Compensation

The response to this item is incorporated by reference from the discussion responsive thereto under the ~~caption “Executive Officer~~captions “Directors’ Compensation” and ~~Director Compensation”~~“Compensation of Executive Officers” inour ~~proxy statement for the 2021 annual meeting of stockholders.~~2024 Proxy Statement.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our ~~proxy statement for the 2021 annual meeting of stockholders.~~2024 Proxy Statement.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Certain Relationships and Related Person Transactions” and ~~“Management~~“Board Matters and Corporate Governance” in our ~~proxy statement for the 2021 annual meeting of stockholders.~~

2024 Proxy Statement.

ITEM 14. Principal Accounting Fees and Services

The response to this item is incorporated by reference from the discussion responsive thereto under the caption ~~“Ratification of Appointment of Independent Registered Public Accounting Firm”~~“Accounting Fees” in our ~~proxy statement for the 2021 annual meeting of stockholders.~~

2024 Proxy Statement.

4140

PART IV

ITEM 15. Exhibits and Financial Statement Schedule

(a) 1. Financial Statements

The financial statements are listed in the accompanying index to financial statements on page F-1.

2. Financial Statement Schedule

The financial statement schedule is listed in the accompanying index to financial statements on page F-1. Other financial statement schedules required under this Item and Item 8 are omitted because they are not applicable or the required information is shown in the financial statements or the footnotes thereto.

3. Exhibit Index

The following is a list of exhibits filed as part of this Annual Report on Form 10-K:

Exhibit Number

Exhibit Description

Filed with this Report

Incorporated by
Reference herein
from Form or
Schedule

Filing Date

SEC File/
Registration
Number

3.1.1

Third Amended and Restated Certificate of Incorporation of NeuroMetrix, Inc. dated July 27, 2004

S-8
(Exhibit 4.1)

8/9/2004

333-118059

3.1.2

Certificate of Designations for Series A Junior Cumulative Preferred Stock, par value $0.001 per share, dated March 7, 2007

8-A12(b)
(Exhibit 3.1)

3/8/2007

001-33351

~~Exhibit Number~~

~~Exhibit Description~~

~~Filed with this Report~~

Incorporated by
Reference herein
from Form or
Schedule

~~Filing Date~~

SEC File/
Registration
Number

3.1.3

Certificate of Amendment to Restated Certificate of Incorporation of NeuroMetrix, Inc. dated September 1, 2011

8-K
(Exhibit 3.1)

9/1/2011

001-33351

3.1.4

Certificate of Amendment to Restated Certificate of Incorporation of NeuroMetrix, Inc. dated February 15, 2013

8-K
(Exhibit 3.1)

2/15/2013

001-33351

3.1.5

Certificate of Amendment to Restated Certificate of Incorporation of NeuroMetrix, Inc. dated December 1, 2015

8-K
(Exhibit 3.1)

12/1/2015

001-33351

~~3.1.~~3.1.66

Certificate of Amendment of Restated Certificate of Incorporation of NeuroMetrix, Inc. dated May 11, 2017

8-K
(Exhibit 3.1)

5/12/2017

001-33351

~~3.1.~~3.1.77

Certificate of Amendment to Restated Certificate of Incorporation of NeuroMetrix, Inc. dated November 18, 2019

8-K
(Exhibit 3.1)

11/18/2019

001-33351

3.1.8

Certificate of Amendment to Restated Certificate of Incorporation of NeuroMetrix, Inc. dated November 20, 2023

8-K
(Exhibit 3.1)

11/20/2023

001-33351

3.1.9

Certificate of Designation of Preferences, Rights and Limitations of Series A-1 Convertible Preferred Stock, par value $0.001 per share, dated June 5, 2013

8-K
(Exhibit 3.1)

6/6/2013

001-33351

~~3.1.~~3.1.109

Certificate of Designation of Preferences, Rights and Limitations of Series A-2 Convertible Preferred Stock, par value $0.001 per share, dated June 5, 2013

8-K
(Exhibit 3.2)

6/6/2013

001-33351

~~3.1.~~3.1.1110

Certificate of Designation of Preferences, Rights and Limitations of Series A-3 Convertible Preferred Stock, par value $0.001 per share, dated June 24, 2014

8-K
(Exhibit 3.1)

6/25/2014

001-33351

~~3.1.~~3.1.1211

Certificate of Designation of Preferences, Rights and Limitations of Series A-4 Convertible Preferred Stock, par value $0.001 per share, dated June 24, 2014

8-K
(Exhibit 3.2)

6/25/2014

001-33351

Exhibit Number

Exhibit Description

Filed with this Report

Incorporated by
Reference herein
from Form or
Schedule

Filing Date

SEC File/
Registration
Number

~~3.1.1~~3.1.132

Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, par value $0.001 per share, dated May 26, 2015

8-K
(Exhibit 3.1)

5/29/2015

001-33351

~~3.1.1~~3.1.143

Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, par value $0.001 per share, dated December 30, 2015

8-K
(Exhibit 3.1)

12/30/2015

001-33351

~~3.1.1~~3.1.154

Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, par value $0.001 per share, dated June 3, 2016

8-K
(Exhibit 3.1)

6/3/2016

001-33351

~~3.1.1~~3.1.165

Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock, par value $0.001 per share, dated December 28, 2016

8-K
(Exhibit 3.1)

12/29/2016

001-33351

~~3.1.1~~3.1.176

Certificate of Designation of Preferences, Rights and Limitations of Series F Convertible Preferred Stock, par value $0.001 per share, dated July 10, 2017

8-K
(Exhibit 3.1)

7/11/2017

001-33351

3.2.1

~~Second Amended and Restated Bylaws of NeuroMetrix, Inc.~~

S-8
(Exhibit 4.2)

~~8/9/2004~~

~~333-118059~~

~~Exhibit Number~~

~~Exhibit Description~~

~~Filed with this Report~~

Incorporated by
Reference herein
from Form or
Schedule

~~Filing Date~~

SEC File/
Registration
Number

~~3.2.2~~

~~Amendment No. 1 to Second~~ Amended and Restated Bylaws of NeuroMetrix, Inc.

8-K
(Exhibit 3.1)

~~9/17/2007~~12/10/2021

001-33351

4.1

Description of Securities of the Registrant

X10-K
(Exhibit 4.1)

1/28/2022

001-33351

4.4.22

Specimen Certificate for Shares of Common Stock

S-1/A
(Exhibit 4.1)

7/19/2004

333-115440

4.4.3.1~~3.1~~

Shareholder Rights Agreement, dated as of March 7, 2007, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

8-A12(b)
(Exhibit 4.1)

3/8/2007

001-33351

4.4.3.2~~3.2~~

Amendment to Shareholder Rights Agreement, dated September 8, 2009, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

8-K
(Exhibit 4.1)

9/14/2009

001-33351

4.4.3.3~~3.3~~

Amendment No. 2 to Shareholder Rights Agreement, dated June 5, 2013, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

8-K
(Exhibit 4.2)

6/6/2013

001-33351

4.4.3.4~~3.4~~

Amendment No. 3 to Shareholder Rights Agreement, dated June 25, 2014, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

8-K
(Exhibit 4.2)

6/25/2014

001-33351

4.4.3.5~~3.5~~

Amendment No. 4 to Shareholder Rights Agreement, dated May 28, 2015, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

10-Q
(Exhibit 4.1)

7/23/2015

001-33351

4.4.3.6~~3.6~~

Amendment No. 5 to Shareholder Rights Agreement, dated December 29, 2015, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

8-K
(Exhibit 4.3)

12/30/2015

001-33351

Exhibit Number

Exhibit Description

Filed with this Report

Incorporated by
Reference herein
from Form or
Schedule

Filing Date

SEC File/
Registration
Number

4.4.3.7~~3.7~~

Amendment No. 6 to Shareholder Rights Agreement, dated June 3, 2016, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

8-K
(Exhibit 4.2)

6/3/2016

001-33351

4.4.3.8~~3.8~~

Amendment No. 7 to Shareholder Rights Agreement, dated December 28, 2016, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

8-K
(Exhibit 4.2)

12/29/2016

001-33351

4.4.3.9~~3.9~~

Amendment No. 8 to Shareholder Rights Agreement, dated February 8, 2017, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

10-K
(Exhibit 4.2.9)

2/8/2017

001-33351

4.4.3.10~~3.10~~

Amendment No. 9 to Shareholder Rights Agreement, dated July 10, 2017, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

8-K
(Exhibit 4.2)

7/11/2017

001-33351

4.4.3.11~~3.11~~

Amendment No. 10 to Shareholder Rights Agreement, dated February 5, 2018, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

10-K
(Exhibit 4.2.11)

2/8/2018

001-33351

~~Exhibit Number~~

~~Exhibit Description~~

~~Filed with this Report~~

Incorporated by
Reference herein
from Form or
Schedule

~~Filing Date~~

SEC File/
Registration
Number

4.4.3.12~~3.12~~

Amendment No. 11 to Shareholder Rights Agreement, dated January 21, 2019, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

10-K
(Exhibit 4.2.11)

1/24/2019

001-33351

4.3.13

Amendment No. 12 to Shareholder Rights Agreement, dated January 27, 2020, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

10-K
(Exhibit 4.3.13)

1/28/2020

001-33351

44.3.14~~.3.14~~

Amendment No. 13 to Shareholder Rights Agreement, dated January 25, 2021, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

4.~~4.1~~

~~Form of Unit Warrant to purchase Common Stock (February 2012)~~

~~S-1/A~~10-K
(Exhibit ~~4.5)~~4.3.14)

1/29/2021

~~1/31/2012~~

~~333-178165~~

4.~~4.2~~

~~Form of Placement Agent Warrant (February 2012)~~

S-1/A
(Exhibit 4.6)

~~1/31/2012~~

~~333-178165~~

4.5

~~Form of Common Stock Purchase Warrant (June 2013)~~

8-K/A
(Exhibit 4.1)

~~6/7/2013~~

001-33351

4.4.3.156

Amendment No. 14 to Shareholder Rights Agreement, dated July 20, 2021, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

~~Form of Common Stock Purchase Warrant (June 2014)~~

~~8-K~~10-Q
(Exhibit 4.1)

7/22/2021

~~6/25/2014~~

001-33351

4.4.3.16~~7.1~~

Amendment No. 15 to Shareholder Rights Agreement, dated March 6, 2023, between NeuroMetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent

~~Form of Warrant (2015) issued as part of a Unit on May 29, 2015~~

S-1/A
(Exhibit 4.3)

~~5/4/2015~~

~~333-188133~~

4.~~7.2~~

~~Form of Underwriter’s Warrant (2015) issued on May 29, 2015~~

S-1/A
(Exhibit 4.5)

~~4/13/2015~~

~~333-188133~~

4.8

~~Form of Series A Common Stock Purchase Warrant (December 2015)~~

8-K
~~(Exhibit~~ (Exhibit 4.1)

3/10/2023

~~12/30/2015~~

001-33351

4.4.3.179

Amendment No. 16 to Shareholder Rights Agreement, dated February 20, 2024, between NeuroMetrix, Inc. and Equiniti Trust Company LLC, as Rights Agent

~~Form of Series B Common Stock Purchase Warrant (December 2015)~~

8-K
(Exhibit 4.2)

~~12/30/2015~~

~~001-33351~~

4.10

~~Form of Common Stock Purchase Warrant (June 2016)~~

8-K
(Exhibit8-K/A (Exhibit 4.1)

2/27/2024

~~6/3/2016~~

~~001-33351~~

~~4.1~~1

~~Form of Common Stock Purchase Warrant (December 2016)~~

8-K
(Exhibit 4.1)

~~12/29/2016~~

001-33351

Lease Agreements

10.1.1

Lease Agreement, dated August 27, 2014, between Cummings Properties, LLC and NeuroMetrix, Inc.

10-Q
(Exhibit 10.1)

10/28/2014

011-33351

10.1.2

~~Lease Agreement, dated September 10, 2014, between, Boston Properties, Inc. and NeuroMetrix, Inc.~~

10-Q
(Exhibit 10.2)

~~10/28/2014~~

~~011-33351~~

~~10.1.3~~

Lease Extension #1, dated June 14, 2018, between Cummings Properties, LLC and NeuroMetrix, Inc.

10-Q
(Exhibit 10.2)

7/19/2018

011-33351

Credit Facilities, Loan and Equity Agreements

~~10.~~10.5.32

Promissory Note with Comerica Bank dated April 27, 2020

~~Repurchase and Forfeiture~~8-K
(Exhibit 10.1)

4/30/2020

001-33351

10.5.4

Loan Agreement by and between NeuroMetrix, Inc. and ~~the parties named therein~~Comerica Bank, dated April 27, 2020

10-Q
(Exhibit 10.1)

~~7/23/2015~~

~~001-33351~~

~~10.~~3 .1

~~Securities Purchase Agreement by and between NeuroMetrix, Inc. and the purchasers named therein, dated December 29, 2015~~

8-K
(Exhibit 10.1)

~~12/30/2015~~

~~001-33351~~

~~10.~~3 .2

~~Registration Rights Agreement by and between NeuroMetrix, Inc. and the purchasers named therein, dated December 29, 2015~~

8-K
(Exhibit 10.2)

4/30/2020

~~12/30/2015~~

001-33351

4543

Exhibit Number

Exhibit Description

Filed with this Report

Incorporated by
Reference herein
from Form or
Schedule

Filing Date

SEC File/
Registration
Number

~~10.~~4 .110.5.5

~~Securities Purchase Agreement by and between NeuroMetrix, Inc. and the purchasers named therein, dated June 2, 2016~~

8-K
(Exhibit 10.1)

~~6/3/2016~~

~~001-33351~~

~~10.~~4 .2

~~Registration Rights Agreement by and between NeuroMetrix, Inc. and the purchasers named therein, dated June 2, 2016~~

8-K
(Exhibit 10.2)

~~6/3/2016~~

~~001-33351~~

~~10.~~5 .1

~~Securities Purchase Agreement by and between NeuroMetrix, Inc. and the purchasers named therein, dated December 28, 2016~~

8-K
(Exhibit 10.1)

~~12/29/2016~~

~~001-33351~~

~~10.~~5 .2

~~Registration Rights Agreement by and between NeuroMetrix, Inc. and the purchasers named therein, dated December 28, 2016~~

8-K
(Exhibit 10.2)

~~12/29/2016~~

~~001-33351~~

10~~.5.3~~

At Market Issuance Sales Agreement by and between NeuroMetrix, Inc. and Ladenburg Thalmann & Co. Inc., dated ~~February 19, 2020~~October 22, 2021

~~8-K~~S-3
(Exhibit ~~10.1)~~1.2)

~~2/19/2020~~10/22/2021

~~001-33351~~

10~~.5.4~~

~~Promissory Note with Comerica Bank dated April 27, 2020~~

8-K
(Exhibit 10.1)

~~4/30/2020~~

~~001-33351~~

10~~.5.5~~

~~Loan Agreement by and between NeuroMetrix, Inc. and Comerica Bank, dated April 27, 2020~~

8-K
(Exhibit 10.2)

~~4/30/2020~~

~~001-33351~~333-260438

Equity Compensation Plans

~~10.~~10.6+6+

~~Amended and Restated 1996 Stock Option/Restricted Stock Plan~~

S-1/A
(Exhibit 10.2)

~~6/22/2004~~

~~333-115440~~

~~10.7.1+~~

~~Amended and Restated 1998 Equity Incentive Plan~~

S-1/A
(Exhibit 10.3)

~~6/22/2004~~

~~333-115440~~

~~10.7.2+~~

~~Second Amendment to Amended and Restated 1998 Equity Incentive Plan~~

S-1
(Exhibit 10.18)

~~6/22/2004~~

~~333-115440~~

~~10.8.1+~~

~~Eleventh~~Twelfth Amended and Restated 2004 Stock Option and Incentive Plan

14A
(Appendix C)A)

~~1/18/2019~~3/16/2021

001-33351

~~10.~~10.7+~~8.2+~~

~~Form of Restricted Stock Agreement~~

10-Q
(Exhibit 10.4)

~~5/14/2010~~

~~001-33351~~

~~10.8.3+~~

~~Form of Incentive Stock Option Agreement~~

10-Q
(Exhibit 10.1)

~~11/15/2004~~

~~000-50856~~

~~10.8.4+~~

~~Form of Non-Qualified Stock Option Agreement For Company Employees~~

10-Q
(Exhibit 10.2)

~~11/15/2004~~

~~000-50856~~

~~10.8.5+~~

~~Form of Non-Qualified Stock Option Agreement For Non-Employee Directors~~

10-Q
(Exhibit 10.3)

~~11/15/2004~~

~~000-50856~~

~~10.~~9+

2009 Non-Qualified Inducement Stock Plan

S-8
(Exhibit 99.1)

6/3/2009

333-159712

~~10.~~10.8+~~10.1+~~

~~Fourth Amended and Restated 2010~~ Employee Stock Purchase Plan, as amended

~~14A~~S-8
(~~Appendix B)~~Exhibit 99.1)

~~3/9/2018~~5/19/2022

~~001-33351~~333-265080

10.9.1+

2022 Equity Incentive Plan

S-8
(Exhibit 99.2)

5/19/2022

333-265080

10.9.2+

Form of Stock Option Agreement under 2022 Equity Incentive Plan

S-8
(Exhibit 99.3)

5/19/2022

333-265080

10.9.3+

Form of Restricted Stock Unit Agreement under 2022 Equity Incentive Plan

S-8
(Exhibit 99.4)

5/19/2022

333-265080

Agreements with Executive Officers and Directors

~~10.~~10.10+~~11+~~

Form of Indemnification Agreement between NeuroMetrix, Inc. and each of its directors

S-1/A
(Exhibit 10.8)

6/22/2004

333-115440

~~10.~~10.11.1+~~12.1+~~

Indemnification Agreement dated June 21, 2004, by and between Shai N. Gozani, M.D., Ph.D., and NeuroMetrix, Inc.

S-1/A
(Exhibit 10.20)

6/22/2004

333-115440

~~Exhibit Number~~

~~Exhibit Description~~

~~Filed with this Report~~

Incorporated by
Reference herein
from Form or
Schedule

~~Filing Date~~

SEC File/
Registration
Number

~~10.1~~10.11.2+~~2.2+~~

Employment Agreement dated December 30, 2020, by and between NeuroMetrix, Inc. and Shai N. Gozani, M.D., Ph.D., and NeuroMetrix, as amended

~~8-K~~10-K
(Exhibit ~~10.13.5)~~10.12.2)

~~12/31/2020~~1/28/2022

001-33351

~~10.1~~10.12.1+~~3.1+~~

Indemnification Agreement, dated September 10, 2009, by and between NeuroMetrix, Inc. and Thomas T. Higgins

8-K
(Exhibit 10.2)

9/15/2009

001-33351

~~10.1~~10.12.2+~~3.2+~~

Employment Agreement, dated December 30, 2020 by and between NeuroMetrix, Inc. and Thomas T. Higgins, as amended

~~8-K~~10-K
(Exhibit ~~10.14.4)~~10.13.2)

~~12/31/2020~~1/28/2022

001-33351

~~10.~~10.13+~~14+~~

Amended and Restated Management Retention and Incentive Plan, as modified, dated February 3, 2017

10-K
(Exhibit 10.17)

2/9/2017

001-33351

10.14+

Amended and Restated Management Retention and Incentive Plan, as modified, dated January 20, 2020

10-K
(Exhibit 10.16.2)

1/28/2020

001-33351

Agreements with Respect to Collaborations, Licenses, Research and Development

~~10.1~~10.15†5 +

~~Amended and Restated Management Retention and Incentive Plan, as modified, dated January 20, 2020~~

10-K
(Exhibit 10.16.2)

~~1/28/2020~~

~~001-33351~~

~~10.1~~6†

Manufacturing and Supply Agreement, dated as of August 2, 2006, by and between Parlex Polymer Flexible Circuits, Inc. and NeuroMetrix, Inc.

8-K
(Exhibit 99.1)

8/2/2006

000-50856

Other

~~10.1~~23.17†

~~Asset Purchase Agreement, dated as~~Consent of ~~January 12, 2018, by and between Novartis Consumer Health S.A. and NeuroMetrix, Inc.~~

10-K
(Exhibit 10.19)Baker Tilly US, LLP, an independent registered public accounting firm.

~~2/8/2018~~X

~~001-33351~~

~~10.18†~~

~~Development and Services Agreement, dated as of January 12, 2018, by and between Novartis Consumer Health S.A. and NeuroMetrix, Inc.~~

10-K
(Exhibit 10.20)

~~2/8/2018~~

~~001-33351~~

~~10.19†~~

~~Contribution Agreement, dated as of December 22, 2017, by and between Quell Intellectual Property Corp., LLC and NeuroMetrix, Inc.~~

10-K
(Exhibit 10.21)

~~2/8/2018~~

~~001-33351~~

~~10.2~~0†

~~Amended and Restated Limited Liability Company Agreement of Quell Intellectual Property Corp., LLC, dated as of January 12, 2018, by and between Novartis Consumer Health S.A. and NeuroMetrix, Inc.~~

10-K
(Exhibit 10.22)

~~2/8/2018~~

~~001-33351~~

~~10.2~~1

~~NeuroMetrix License Agreement, dated as of December 21, 2017, by and between Quell Intellectual Property Corp., LLC and NeuroMetrix, Inc.~~

10-K
(Exhibit 10.23)

~~2/8/2018~~

~~001-33351~~

~~10.2~~2

~~GSK License Agreement, dated as of December 21, 2017, by and between Quell Intellectual Property Corp., LLC and NeuroMetrix, Inc.~~

10-K
(Exhibit 10.24)

~~2/8/2018~~

~~001-33351~~

~~10.2~~3

~~Assignment Agreement, dated as of January 12, 2018, by and between Novartis Consumer Health S.A. and NeuroMetrix, Inc.~~

10-K
(Exhibit 10.25)

~~2/8/2018~~

~~001-33351~~

~~10.2~~4*

~~Amendment No.1 to Development and Services Agreement, dated as of December 6, 2018, by and between GSK Consumer Health S.A. and NeuroMetrix, Inc.~~

10-K
(Exhibit 10.26)

~~1/24/2019~~

~~001-33351~~

4744

Exhibit Number

Exhibit Description

Filed with this Report

Incorporated by
Reference herein
from Form or
Schedule

Filing Date

SEC File/
Registration
Number

~~23.1~~

~~Consent of Moody, Famiglietti & Andronico, LLP, an independent registered public accounting firm.~~

31.1

Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Accounting and Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of the Principal Executive Officer and the Principal Accounting and Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

Compensation Recovery Policy

~~101~~101.1

The following materials from NeuroMetrix, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2023, formatted in XBRL (Extensible Business Reporting Language): (i) Balance Sheets as of December 31, ~~2020~~2023 and ~~2019,~~2022, (ii) Statements of Operations for the years ended December 31, ~~2020~~2023 and ~~2019,~~2022, (iii) Statements of Changes in Stockholders’ Equity for the years ended December 31, ~~2020~~2023 and ~~2019,~~2022, (iv) Statements of Cash Flows for the years ended December 31, ~~2020~~2023 and ~~2019,~~2022, and (v) Notes to Financial Statements.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase

101.LAB

XBRL Taxonomy Extension Label Linkbase

101.PRE

XBRL Taxonomy Extension Presentation Linkbase


			+			Indicates management contract or any compensatory plan, contract or arrangement.


			†			Confidential treatment has been granted with respect to certain portions of this Exhibit, which portions have been omitted and filed separately with the Securities and Exchange Commission as part of an application for confidential treatment pursuant to the Securities Exchange Act of 1934, as amended.

ITEM 16. Form 10-K Summary

We may voluntarily include a summary of information required by Form 10-K under this Item 16. We have elected not to include such summary information.

4845

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NEUROMETRIX, INC.


			By:			/s/ SHAI N. GOZANI, M.D., PH.D.
						Shai N. Gozani, M.D., Ph.D. Chairman, President and Chief Executive Officer

Date: ~~January 28, 2021~~March 1, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant on ~~January 28, 2021~~March 1, 2024 in the capacities indicated below.


Name						Title
/s/ SHAI N. GOZANI, M.D., PH.D.						Chairman, President and Chief Executive Officer (Principal Executive Officer)
Shai N. Gozani, M.D., Ph.D.
/s/ THOMAS T. HIGGINS						Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)
Thomas T. Higgins
/s/ BRADLEY M. FLUEGEL						Director
Bradley M. Fluegel
/s/ DAVID E. GOODMAN, M.D.						Director
David E. Goodman, M.D.
/s/ NANCY E. KATZ						Director
Nancy E. Katz
/s/ DAVID VAN AVERMAETE						Director
David Van Avermaete

4946

INDEX TO FINANCIAL STATEMENTS

NeuroMetrix, Inc.

Years ended December 31, ~~2020~~2023 and ~~2019~~2022


			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 23)			F-2
Financial Statements
Balance Sheets			F-3
Statements of Operations			F-4
Statements of ~~Operations~~Comprehensive Loss			F-5F-4
Statements of Changes in Stockholders’ Equity			F-65
Statements of Cash Flows			F-76
Notes to Financial Statements			F-87
Schedule II — Valuation and Qualifying Accounts			S-1

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of NeuroMetrix, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of NeuroMetrix, Inc. (the Company) as of December 31, ~~2020~~2023 and ~~2019,~~2022, and the related statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years in the two year period ended December 31, ~~2020,~~2023, and the related notes and schedule (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2023 and ~~2019,~~2022, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, ~~2020,~~2023, in conformity with accounting principles generally accepted in the United States of America.

~~Going Concern Uncertainty~~

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, negative cash flows from operating activities and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

~~The critical~~Critical audit ~~matter communicated below is a matter~~matters are matters arising from the current period audit of the financial statements that ~~was~~were communicated or required to be communicated to the audit committee and ~~that (i) relates~~that: (1) relate to accounts or disclosures that are material to the financial statements and ~~(ii)~~(2) involved our especially challenging, subjective, or complex judgments. ~~The communication of~~We determined that there are no critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.matters.

~~F-2~~

~~Inventory Valuation~~

As described in Note 2 to the financial statements, inventories are stated at the lower of cost or net realizable value. Management estimates the net realizable value of inventory by considering the types and levels of inventories held, forecasted demand, pricing, competition, and changes in technology.

We identified inventory valuation as a critical audit matter. The principal consideration for our determination that inventory valuation is a critical audit matter is that there was significant judgment by management to estimate the net realizable value of inventory and excess and obsolete inventory reserves, including forecasted customer demand. This in turn led to subjective auditor judgment, and significant effort in performing procedures to assess the reasonableness of management’s estimates related to inventory valuation and in evaluating the audit evidence obtained.

~~Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included, among others:~~

•testing management’s process for estimating the net realizable value of inventory and excess and obsolete inventory reserves, including evaluating the appropriateness of the analysis of forecasted demand and testing the completeness, accuracy and relevance of the underlying data used in the analysis

•~~evaluating management’s analysis of forecasted demand involved evaluating the reasonableness of management’s assumptions through evaluating performance trends.~~

/s/ ~~Moody, Famiglietti, & Andronico, LLP~~

~~Moody, Famiglietti, & Andronico,~~Baker Tilly US, LLP

We have served as the Company's auditor since 2017

Tewksbury, Massachusetts

~~January 28, 2021~~March 1, 2024

~~F-3~~F-2

NeuroMetrix, Inc.

Balance Sheets


		December 31,
	December 31,								December 31,
		2020		2019			2023	2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	5,226,213	$	3,126,206
Accounts receivable, net of allowances of $25,000 and $70,000 at December 31, 2020 and 2019, respectively		334,297		298,967
Available-for-sale securities
Held-to-maturity securities
Accounts receivable, net of allowances of $25,000 at December 31, 2023 and 2022
Inventories	Inventories	1,051,282		1,163,714
Collaboration receivable		0		189,008

Prepaid expenses and other current assets
Prepaid expenses and other current assets
Prepaid expenses and other current assets	Prepaid expenses and other current assets	478,074		652,919
Total current assets	Total current assets	7,089,866		5,430,814
Fixed assets, net	Fixed assets, net	183,494		273,448
Right to use asset		692,692		1,159,774
Right of use asset
Other long-term assets	Other long-term assets	28,523		29,650
Total assets	Total assets	$	7,994,575	$	6,893,686
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	142,316	$	725,658
Accrued expenses and compensation	Accrued expenses and compensation	998,442		1,443,574
Accrued product returns		545,000		689,000

Lease obligation, current portion
Lease obligation, current portion
Lease obligation, current portion	Lease obligation, current portion	599,632		588,546

Total current liabilities	Total current liabilities	2,285,390		3,446,778
Total current liabilities
Total current liabilities
Lease obligation, net of current portion	Lease obligation, net of current portion	461,410		916,674
Total liabilities	Total liabilities	2,746,800		4,363,452
Commitments and contingencies (Note 8)		0		0
Stockholders’ equity
Commitments and contingencies (Note 10)						Commitments and contingencies (Note 10)
Stockholders’ equity:						Stockholders’ equity:
Preferred stock	Preferred stock	0		0
Convertible preferred stock	Convertible preferred stock	1		1
Common stock, $0.0001 par value; 25,000,000 authorized at December 31, 2020 and 2019; 3,793,739 and 1,400,674 shares issued and outstanding at December 31, 2020 and 2019, respectively		379		140
Common stock, $0.0001 par value; 25,000,000 authorized at December 31, 2023 and 2022; 1,524,939 and 971,492 shares issued and outstanding at December 31, 2023 and 2022, respectively
Additional paid-in capital	Additional paid-in capital	202,129,195		197,319,698
Accumulated other comprehensive income
Accumulated deficit	Accumulated deficit	(196,881,800)		(194,789,605)
Total stockholders’ equity	Total stockholders’ equity	5,247,775		2,530,234
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	7,994,575	$	6,893,686


Delaware						04-3308180
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)



4B Gill Street, Woburn, Massachusetts						01801
(Address of Principal Executive Offices)						(Zip Code)


PART I
Item 1.	Business	1
Item 1A.	Risk Factors	14
Item 1B.	Unresolved Staff Comments	2729
Item 1 C .	Cybersecurity	29
Item 2.	Properties	2830
Item 3.	Legal Proceedings	2830
Item 4.	Mine Safety Disclosures	2830
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2931
Item 6.	~~Selected Financial Data~~Reserved	2931
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3132
Item 8.	Financial Statements and Supplementary Data	3836
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	3836
Item 9A.	Controls and Procedures	3836
Item 9B.	Other Information	3937
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	37
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	4038
Item 11.	Executive Compensation	40
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	40
Item 13.	Certain Relationships and Related Transactions and Director Independence	40
Item 14.	Principal Accounting Fees and Services	4140
PART IV
Item 15.	Exhibits and Financial Statement Schedule	4241
Item 16.	Form 10-K Summary	4845
Signatures		4946


	Years Ended December 31,
	2020		2019
Revenues	$	7,377,975	$	9,272,522
Cost of revenues	2,128,417		7,026,899
Gross profit	5,249,558		2,245,623
Operating expenses:
Research and development	2,391,316		3,101,976
Sales and marketing	1,436,806		4,755,168
General and administrative	3,516,340		5,923,190
Total operating expenses	7,344,462		13,780,334
Loss from operations	(2,094,904)		(11,534,711)
Other income:
Collaboration income	0		7,716,667
Other income	2,709		45,030
Total other income	2,709		7,761,697
Net loss applicable to common stockholders:	$	(2,092,195)	$	(3,773,014)





Net loss per common share applicable to common stockholders:

Basic and diluted	$	(0.69)	$	(3.90)


	Years Ended December 31,
	2020		2019
Cash flows for operating activities:
Net loss	$	(2,092,195)	$	(3,773,014)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	89,954		124,012
Stock-based compensation	599,117		190,331
Settlement of compensation obligation	43,751		0
Allowance for doubtful accounts	0		49,361
Impairment charge against right of use asset	350,000		400,000
Inventory provision	0		2,595,884
Changes in operating assets and liabilities:
Accounts receivable	(35,330)		734,629
Inventories	112,432		(897,734)
Collaboration receivable	189,008		(189,008)
Prepaid expenses and other current and long-term assets	(151,124)		243,536
Accounts payable	(583,342)		(572,426)
Accrued expenses and compensation	(445,132)		(157,644)
Accrued product returns	(144,000)		(412,658)

Deferred collaboration income	0		(1,956,522)
Net cash used in operating activities	(2,066,861)		(3,621,253)
Cash flows for investing activities:
Purchases of fixed assets	0		(48,076)
Net cash used in investing activities	0		(48,076)
Cash flows from financing activities:
Net proceeds from issuance of stock	4,166,868		15,106
Debt proceeds	773,200		0
Repayment of debt proceeds	(773,200)		0
Net cash provided by financing activities	4,166,868		15,106
Net increase (decrease) in cash and cash equivalents	2,100,007		(3,654,223)
Cash and cash equivalents, beginning of year	3,126,206		6,780,429
Cash and cash equivalents, end of year	$	5,226,213	$	3,126,206
Supplemental disclosure of cash flow information:
Common stock issued to settle employee incentive compensation obligations	$	43,751	$	0


(Mark One)
☒						ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a)
	(a)	(b)		(c)
Equity compensation plans approved by security holders(1)	361,956	$	3.68	53,356	(2)
Equity compensation plans not approved by security holders(3)	—	—		1,250
Totals	361,956	$	3.68	54,606


	December 31, 2020		December 31, 2019		Change		% Change
	(in thousands)
Cash and cash equivalents	$	5,226.2	$	3,126.2	$	2,100.0	67.2	%


	Series B Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Number of Shares	Amount		Number of Shares	Amount
Balance at December 31, 2021	200	$	1	831,310	$	84	$	222,378,958	$	—	$	(199,163,257)	$	23,215,786
Stock-based compensation expense	—	—		—	—		477,062		—		—		477,062
Issuance of common stock under at the market offering	—	—		114,542	11		3,833,761		—		—		3,833,772
Issuance of common stock to settle compensation obligation	—	—		6,276	—		215,417		—		—		215,417
Issuance of common stock under employee stock purchase plan	—	—		2,526	—		30,259		—		—		30,259
Vesting of restricted stock under equity plan	—	—		4,806	1		(1)		—		—		—
Net loss	—	—		—	—		—		—		(4,416,609)		(4,416,609)
Balance at December 31, 2022	200	1		959,460	96		226,935,456		—		(203,579,866)		23,355,687
Stock-based compensation expense	—	—		—	—		699,505		—		—		699,505
Issuance of common stock under at the market offering	—	—		537,094	54		2,305,699		—		—		2,305,753
Issuance of common stock under employee stock purchase plan	—	—		4,902	—		19,688		—		—		19,688
Vesting of restricted stock under equity plan	—	—		17,261	2		(2)		—		—		—
Unrealized gain on available-for-sale securities	—	—		—	—		—		605,100		—		605,100
Realized gain on available-for-sale securities	—	—		—	—		—		(364,929)		—		(364,929)
Net loss	—	—		—	—		—		—		(6,529,487)		(6,529,487)
Balance at December 31, 2023	200	$	1	1,518,717	$	152	$	229,960,346	$	240,171	$	(210,109,353)	$	20,091,317


	Series B – F Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total
	Number of Shares	Amount		Number of Shares	Amount







Balance at December 31, 2018	17,513.63	$	18	738,029	$	74	$	197,114,310	$	(191,016,591)	$	6,097,811
Stock-based compensation expense	—	—		—	—		190,331		—		190,331
Issuance of common stock upon conversion of preferred stock	(17,313.63)	(17)		658,314	65		(48)		—		—

Issuance of common stock under employee stock purchase plan	—	—		4,331	1		15,105		—		15,106

Net loss	—	—		—	—		—		(3,773,014)		(3,773,014)
Balance at December 31, 2019	200.00	1		1,400,674	140		197,319,698		(194,789,605)		2,530,234
Stock-based compensation expense	—	—		—	—		599,117		—		599,117
Issuance of common stock under at the market offering	—	—		2,348,619	234		4,143,197		—		4,143,431
Issuance of common stock to settle compensation obligations	—	—		31,000	3		43,748		—		43,751
Issuance of common stock under employee stock purchase plan	—	—		13,446	2		23,435		—		23,437
Net loss	—	—		—	—		—		(2,092,195)		(2,092,195)
Balance at December 31, 2020	200.00	$	1	3,793,739	$	379	$	202,129,195	$	(196,881,800)	$	5,247,775


		Years Ended December 31,
	2022
Risk-free interest rate			1.8%	—%	3.7%
Expected dividend yield	—
Expected option term	5 years
Volatility	70.0%


		Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2019		164,980	$	7.16
	Number of Options										Number of Options			Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value
Outstanding at December 31, 2022								Outstanding at December 31, 2022	65,662			$	26.15
Granted	Granted	200,000	1.57					Granted	—	—			—
Exercised	Exercised	0	0
Forfeited	Forfeited	(2,996)	31.57
Forfeited
Forfeited									(1,000)			40.21
Expired	Expired	(28)	5,875.19
Outstanding at December 31, 2020		361,956	$	3.68	9.2	$	0
Vested or expected to vest at December 31, 2020		161,158	$	6.25	8.5	$	0
Exercisable at December 31, 2020		161,158	$	6.25	8.5	$	0
Outstanding at December 31, 2023
Outstanding at December 31, 2023
Outstanding at December 31, 2023
Vested or expected to vest at December 31, 2023
Exercisable at December 31, 2023


	Restricted Stock Awards	Weighted Average Grant Date Fair Value		Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	12,032	$	43.44	24,341	$	27.20
Granted	—	$	—	51,210	$	7.45
Vested	(5,094)	$	44.98	(14,535)	$	26.64
Forfeited	(716)	$	34.23	(524)	$	28.41
Unvested at December 31, 2023	6,222	$	43.28	60,492	$	15.10


	December 31, 2023
			Gross Unrealized
Available-for-sale securities	Cost		Gains		Losses		Credit Losses		Estimated Fair Value
U.S. government bonds	$	4,412,935	$	5,665	$	—	$	—	$	4,418,600

Commercial paper	11,612,099		234,506		—		—		11,846,605
Total	$	16,025,034	$	240,171	$	—	$	—	$	16,265,205


	December 31, 2022
Held-to-maturity securities	Amortized Cost		Credit Losses		Estimated Fair Value
U.S. government bonds	$	3,457,651	$	—	$	3,456,580
Corporate bonds	4,011,569		—		3,950,380
Commercial paper	9,395,487		—		9,387,914
Total	$	16,864,707	$	—	$	16,794,874


	December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	1,284,290	$	1,284,290	$	—	$	—
U.S. government bonds	$	4,418,600	$	4,418,600	$	—	$	—
Commercial paper	$	11,846,605	$	—	$	11,846,605	$	—
Total	$	17,549,495	$	5,702,890	$	11,846,605	$	—


		Estimated Useful Life (Years)			December 31,
	Estimated Useful Life (Years)											Estimated Useful Life (Years)	December 31,
				Estimated Useful Life (Years)			2020			2019	2023			2022
Computer and laboratory equipment	Computer and laboratory equipment	$	905,966					$	905,966
Furniture and equipment	Furniture and equipment	3			241,413			241,413
Production equipment	Production equipment	7			216,000			216,000
Leasehold improvements	Leasehold improvements	*			141,485			141,485
					1,504,864			1,504,864
Less – accumulated depreciation	Less – accumulated depreciation				(1,321,370)			(1,231,416)
					$	183,494		$	273,448


2021		$	653,164
2022		247,347
2023		165,785
2024	2024	165,785
2025	2025	117,431

Total minimum lease payments	Total minimum lease payments	$	1,349,512

Weighted-average discount rate, 14.7%		$	288,470

Total minimum lease payments

Total minimum lease payments

Discount rate, 15.0%
Discount rate, 15.0%
Discount rate, 15.0%
Lease obligation, current portion	Lease obligation, current portion	599,632
Lease obligation, net of current portion	Lease obligation, net of current portion	461,410
		$	1,349,512
	$


	December 31, 2020		Fair Value Measurements at December 31, 2020 Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	2,374,216	$	2,374,216	$	0	$	0
Total	$	2,374,216	$	2,374,216	$	0	$	0


	December 31, 2019		Fair Value Measurements at December 31, 2019 Using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	698,807	$	698,807	$	0	$	0
Total	$	698,807	$	698,807	$	0	$	0




Outstanding stock options			64,659
Convertible preferred stock			8
Unvested restricted stock units			60,492
Possible future issuance under inducement plan			156
Possible future issuance under stock option plans			26,520
Possible future issuance under employee stock purchase plan			22,089
Total			173,924




~~Outstanding stock options~~			~~361,956~~
~~Possible future issuance under inducement plan~~			~~1,250~~
~~Possible future issuance under stock option plans~~			~~53,356~~
~~Possible future issuance under employee stock purchase plan~~			0
~~Total~~			~~416,562~~


Description	Balance at Beginning of Period		Provision		Amounts Paid Out		Balance at End of Period
December 31, 2020
Severance obligations:	$	0	$	—	$	—	$	0
Relocation costs:	0		—		—		0
Impairment charge for idle facility	400,000		350,000		(350,000)		400,000

December 31, 2019
Severance obligations:	$	0	$	224,773	$	(224,773)	$	0
Relocation costs:	0		100,000		(100,000)		0
Impairment charge for idle facility	0		400,000		—		400,000


Description	Balance at Beginning of Period		Charged to costs and expenses		Charged to other accounts		Recoveries/ (Deductions)			Balance at End of Period
December 31, 2020
Allowance for Doubtful Accounts	$	70,000	$	—	$	—	$	(45,000)		$	25,000
Deferred Tax Asset Valuation Allowance	2,208,843		3,427,540		—		(2,623,870)		(1)	3,012,513
Accrued Product Returns	689,000				—		(144,000)			545,000
Warranty Reserve	75,300		—		—		(25,700)			49,600
December 31, 2019
Allowance for Doubtful Accounts	$	25,000	$	49,361	$	—	$	(4,361)		$	70,000
Deferred Tax Asset Valuation Allowance	35,041,300		1,535,093		—		(34,367,550)		(1)	2,208,843
Accrued Product Returns	1,101,658		—		—		(412,658)			689,000
Warranty Reserve	129,837		—		—		(54,537)			75,300