Nexalin Amends 10-K for Control Weaknesses, Refiles 2024 Financials

TL;DR

**NXL's 10-K/A reveals significant internal control weaknesses, making its 2024 financials unreliable and signaling a risky investment until these issues are fixed.**

AI Summary

Nexalin Technology, Inc. (NXL) filed a 10-K/A Amendment No. 2 on September 23, 2025, primarily to correct wording in Management's Report on Internal Control over Financial Reporting and to include previously omitted representations in the CEO and CFO certifications (Exhibits 31.1 and 31.2). This amendment necessitated the refiling of the financial statements for the fiscal year ended December 31, 2024. The company's management, including CEO Mark White and CFO Justin Van Fleet, concluded that disclosure controls and procedures were not effective as of December 31, 2024, due to material weaknesses. Specifically, these weaknesses include a lack of sufficient resources for adequate segregation of duties in financial reporting and insufficient IT controls related to user/superuser access to the financial reporting system. The company intends to implement new financial accounting controls and processes to remediate these issues, though this may be costly and time-consuming. Despite these control deficiencies, management believes the refiled financial statements for December 31, 2024, fairly present the company's financial condition, results of operations, and cash flows. The aggregate market value of common stock held by non-affiliates was $10,228,303 as of June 30, 2024, with 17,647,130 shares outstanding as of September 22, 2025.

Why It Matters

This amendment highlights critical internal control deficiencies at Nexalin Technology, Inc., specifically regarding financial reporting and IT access. For investors, this signals heightened operational risk and potential for future financial misstatements if not effectively remediated, impacting investor confidence and potentially NXL's stock price. Employees and customers might see this as a governance issue, though it doesn't directly affect product development or service delivery. Competitively, companies with robust internal controls gain an advantage, as NXL's disclosed weaknesses could deter partnerships or raise scrutiny from regulators like the SEC.

Risk Assessment

Risk Level: high — The risk level is high due to the explicit declaration by Nexalin's CEO and CFO that 'disclosure controls and procedures were not effective' and 'internal control over financial reporting were not effective as of December 31, 2024.' The identified material weaknesses include a 'lack of sufficient resources necessary to provide adequate segregation of duties' and 'insufficient IT controls' related to financial reporting systems, which could lead to undetected misstatements in financial statements.

Analyst Insight

Investors should exercise extreme caution and consider this a red flag. Do not rely solely on the refiled 2024 financial statements without understanding the full implications of the material weaknesses. Monitor NXL's future filings closely for concrete evidence of remediation and independent auditor attestation on internal controls, which is currently exempt for emerging growth companies.

Key Numbers

• $10.2M — Market Value (Non-Affiliate) (Aggregate market value of common stock held by non-affiliates as of June 30, 2024, indicating public float.)
• 17.6M — Shares Outstanding (Total common stock shares outstanding as of September 22, 2025, providing a current share count.)
• 2024 — Fiscal Year End (The fiscal year for which financial statements were refiled and internal controls were found ineffective.)

Key Players & Entities

• Nexalin Technology, Inc. (company) — Registrant filing the 10-K/A
• Mark White (person) — Chief Executive Officer of Nexalin Technology, Inc.
• Justin Van Fleet (person) — Chief Financial Officer of Nexalin Technology, Inc.
• SEC (regulator) — U.S. Securities and Exchange Commission
• Nasdaq Capital Market (company) — Exchange where NXL common stock is registered
• $10,228,303 (dollar_amount) — Aggregate market value of common stock held by non-affiliates as of June 30, 2024
• 17,647,130 (dollar_amount) — Shares of common stock outstanding as of September 22, 2025
• Marcum LLP (company) — Independent registered public accounting firm
• December 31, 2024 (date) — Fiscal year-end for which financial statements were refiled and controls were deemed ineffective

FAQ

Risk Factors

• Ineffective Internal Controls [high — operational]: The company disclosed material weaknesses in its internal control over financial reporting as of December 31, 2024. These include a lack of sufficient resources for adequate segregation of duties and insufficient IT controls related to user access. Management concluded that disclosure controls and procedures were not effective.
• Going Concern Uncertainty [high — financial]: The company has incurred significant losses and requires additional funding to sustain operations. This raises substantial doubt about its ability to continue as a going concern, as noted by the independent registered public accounting firm. The financial statements do not include adjustments for potential outcomes of this uncertainty.

Industry Context

Nexalin Technology operates in the medical device sector, specifically focusing on technology for cancer detection and treatment. This industry is characterized by high R&D costs, stringent regulatory approval processes (e.g., FDA), and a competitive landscape with established players and emerging innovators. Success often hinges on technological differentiation, clinical validation, and effective market access strategies.

Regulatory Implications

The company's disclosure of material weaknesses in internal controls and the going concern uncertainty highlight significant regulatory and compliance risks. Failure to remediate these issues could lead to increased scrutiny from the SEC, potential delisting from exchanges, and difficulties in attracting future investment or partnerships.

What Investors Should Do

1. Monitor Remediation Efforts
2. Assess Going Concern Viability
3. Review Future Filings for Control Improvements

Key Dates

• 2024-12-31: Fiscal Year End — The date as of which financial statements were refiled and internal controls were assessed as ineffective due to material weaknesses.
• 2025-09-23: 10-K/A Amendment No. 2 Filing — This amendment corrected wording in the Management's Report on Internal Control over Financial Reporting and included previously omitted CEO/CFO certifications, necessitating the refiling of the 2024 financial statements.
• 2024-06-30: Market Value Determination — The aggregate market value of common stock held by non-affiliates was $10,228,303 as of this date, indicating the public float.
• 2025-09-22: Shares Outstanding Determination — The company reported 17,647,130 shares outstanding as of this date.

Glossary

10-K/A

An amended annual report filed with the SEC to correct or supplement information previously filed in a Form 10-K. (This filing is an amendment to Nexalin's 2024 annual report, indicating corrections and updates to previously submitted financial information and disclosures.)

Material Weaknesses

A deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. (Nexalin identified material weaknesses in its internal controls, leading to a conclusion that disclosure controls and procedures were not effective as of December 31, 2024.)

Disclosure Controls and Procedures

A process designed to ensure that information required to be disclosed in SEC reports is recorded, processed, summarized, and disclosed within the time periods specified by SEC rules and forms. (Management concluded these controls were not effective due to identified material weaknesses, impacting the reliability of timely and accurate disclosures.)

Going Concern

An assumption that a company will continue to operate for the foreseeable future, typically at least 12 months from the reporting date. (The auditor's report explicitly states substantial doubt about Nexalin's ability to continue as a going concern due to significant losses and the need for additional funding.)

Segregation of Duties

A fundamental internal control principle that involves dividing tasks among different individuals to reduce the risk of errors or fraud. (A material weakness was identified due to a lack of sufficient resources for adequate segregation of duties in financial reporting.)

Year-Over-Year Comparison

This 10-K/A amendment primarily addresses internal control deficiencies and CEO/CFO certifications for the fiscal year ended December 31, 2024, rather than presenting new financial performance data compared to the prior year. The refiled financial statements for 2024 are presented alongside 2023 figures, but the amendment's focus is on the control environment and disclosures, not year-over-year operational growth or changes in financial metrics. New risks related to ineffective controls and going concern uncertainty are highlighted due to the amendment's nature.

Key Financial Figures

• $0.001 — ch registered Common stock, par value $0.001 per share NXL The Nasdaq Capital Ma

Filing Documents

• nexalintech_10ka.htm (10-K/A) — 767KB
• nexalintech_ex23-1.htm (EX-23.1) — 2KB
• nexalintech_ex31-1.htm (EX-31.1) — 12KB
• nexalintech_ex31-2.htm (EX-31.2) — 12KB
• nexalintech_ex32-1.htm (EX-32.1) — 5KB
• nexalintech_ex32-2.htm (EX-32.2) — 5KB
• 0001829126-25-007610.txt ( ) — 5252KB
• nxl-20241231.xsd (EX-101.SCH) — 39KB
• nxl-20241231_cal.xml (EX-101.CAL) — 53KB
• nxl-20241231_def.xml (EX-101.DEF) — 152KB
• nxl-20241231_lab.xml (EX-101.LAB) — 342KB
• nxl-20241231_pre.xml (EX-101.PRE) — 296KB
• nexalintech_10ka_htm.xml (XML) — 837KB

Controls and Procedures

Controls and Procedures 1 PART IV Item 15. Exhibits and Financial Statement Schedules 3 i SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information included or incorporated by reference in this document may not address historical facts and, therefore, could be interpreted to be "forward-looking All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including projections of financial performance; statements of plans, strategies and objectives of management for future operations; any statement concerning developments, performance or industry rankings relating to products or services; any statements regarding future economic conditions or performance; any statements of assumptions underlying any of the foregoing; and any other statements that address activities, events or developments that Nexalin Technology, Inc. and its subsidiaries ("Nexalin" or the "Company" and also referred to as "we," "us" and "our") intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements may be characterized by terminology such as "believe," "anticipate," "expect," "should," "intend," "plan," "will," "estimates," "projects," "strategy" and similar expressions. These statements are based on assumptions and assessments made by the Company's management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. Any such forward-looking statements are not guarantees of future performance (financial or operating), and actual results, developments and business decisions may differ materially from those envisioned by such forward-looking statements. These forward-looking statements are subject to a number of risks an

CONSOLIDATED FINANCIAL STATEMENTS AND

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA See attached Consolidated Financial Statements beginning on page F-1 attached to this Report.

CONTROLS AND PROCEDURES

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated under the Exchange Act as of the end of the period covered by this Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Report to provide reasonable assurance that material information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms due to the material weakness described below. Management's Report on Internal Control over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Our management evaluated, with the participation of our chief executive officer and chief financial officer (our "Certifying Officers"), the effectiveness of our internal control over financial reporting as of December 31, 2024, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifyi

Exhibits and Financial Statement Schedules

Item 15. Exhibits and Financial Statement Schedules (a) Exhibits. Exhibit Number Description of Document 1.1** Underwriting Agreement dated as of September 15, 2022 between the Registrant and Maxim Group LLC 3.1* Certificate of Incorporation, as amended and as currently in effect. 3.2* Amended and Restated Bylaws. 4.1* Form of Specimen stock certificate evidencing shares of common stock. 4.2*** Warrant Agreement between the Company and Continental Stock Transfer and Trust company as warrant agent dated as of September 16, 2022 4.3*** Form of Warrant Certificate (filed as part of Exhibit 4.2) 5.1* Opinion of Warshaw Burstein, LLP as to legality of the shares. 10.1* Potential Joint Venture Agreement between the Company and Wider Come Limited, and Supplement thereto, dated as of September 21, 2018, as supplemented by Supplement Number 1. 10.2* Employment Agreement between the Company and Mark White dated as of February 15, 2021. 10.3* Agreement between the Company and David Owens, M.D. dated as of February 15, 2021 10.4* Quality Assurance Agreement between the Company and Apical Instruments dated December 31, 2020. 10.5* Advisor Agreement with Leonard Osser dated as of December 22,2021. 10.6* Advisor Agreement with Tucker Anderson dated as of December 24, 2021. 10.7* Advisor Agreement with Gian Domenico Trombetta dated December 24, 2021. 10.8* Employment Agreement between the Company and Marilyn Elson dated as of January 11, 2022 10.9* Amendment and Deferral Agreement dated as of March 30, 2022 to Consulting Agreement between the Company and US Asian Consulting Group LLC 10.10* Employment Agreement between the Company and Michael Nketiah dated as of July 1, 2023. 10.11* Form of Lock-Up Agreement. 10.12* Consulting Agreement dated as of May 9, 2018 as amended between the Company and US Asian Consulting Group, LLC, as amended on January 2, 2019 and March 4, 2021 10.13* Promissory Note i

SIGNATURES

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 2 to the Annual Report on Form 10-K, of Nexalin Technology, Inc. to be signed on its behalf by the undersigned, thereunto duly authorized. NEXALIN TECHNOLOGY, INC. By: /s/ Mark White Mark White Chief Executive Officer Date: September 23, 2025 Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment No. 2 to the Annual Report on Form 10-K, of Nexalin Technology, Inc. has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Mark White Mark White Chief Executive Officer Date: September 23, 2025 By: /s/ Justin Van Fleet Justin Van Fleet Chief Financial Officer Date: September 23, 2025 By: /s/ Leslie Bernard Leslie Bernhard Director Date: September 23, 2025 By: /s/ Alan Kazden Alan Kazden Director Date: September 23, 2025 By: /s/ David Owens, M.D. David Owens, M.D. Director Date: September 23, 2025 By: /s/ Ben Hu, M.D. Ben Hu, M.D. Director Date: September 23, 2025 4

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA NEXALIN TECHNOLOGY, INC. CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2024 AND 2023 TABLE OF CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (MARCUM LLP PCAOB FIRM ID 688 ) F-2 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2024 and 2023 F-4 Consolidated Statements of Changes Stockholders' Equity for the Years Ended December 31, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements F-7 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Nexalin Technology, Inc. and Subsidiary Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Nexalin Technology, Inc. and Subsidiary (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company

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