Nexalin Technology, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Nexalin Technology, Inc. has filed its 2023 annual report (10-K) detailing its business operations and financial performance.</b>

AI Summary

Nexalin Technology, Inc. (NXL) filed a Annual Report (10-K) with the SEC on March 27, 2024. Nexalin Technology, Inc. filed its 2023 Form 10-K on March 27, 2024. The company is engaged in the business of electromedical and electrotherapeutic apparatus. The filing covers the fiscal year ending December 31, 2023. Key financial data and business operations for 2023 are detailed. The report includes information on common stock, warrants, and IPO details from September 2022.

Why It Matters

For investors and stakeholders tracking Nexalin Technology, Inc., this filing contains several important signals. This 10-K filing provides a comprehensive overview of Nexalin Technology's financial health and operational status for the fiscal year 2023, crucial for investors assessing the company's performance and future prospects. The detailed financial statements and risk factors within the report offer insights into the company's market position, revenue streams, and potential challenges in the electromedical device sector.

Risk Assessment

Risk Level: medium — Nexalin Technology, Inc. shows moderate risk based on this filing. The company operates in the highly regulated electromedical device industry, facing potential risks related to product development, market adoption, and compliance with healthcare regulations.

Analyst Insight

Investors should review the detailed financial statements and risk factors in the 10-K to understand Nexalin Technology's current financial position and strategic outlook.

Revenue Breakdown

Key Numbers

• 2023-12-31 — Fiscal Year End (Period of report)
• 2024-03-27 — Filing Date (Date of filing)
• 0001527352 — Central Index Key (Company identifier)
• 001-41507 — SEC File Number (SEC filing identifier)
• 2022-09-01 2022-09-20 — IPO Period (Initial Public Offering dates)

Key Players & Entities

• Nexalin Technology, Inc. (company) — Filer name
• NXL (company) — Ticker symbol
• 2023-12-31 (date) — Fiscal year end
• 2024-03-27 (date) — Filing date
• 3845 (industry) — Standard Industrial Classification for Electromedical & Electrotherapeutic Apparatus
• 1776 YORKTOWN (address) — Business and mailing street address
• HOUSTON (location) — Business and mailing city
• DE (location) — State of incorporation

FAQ

Risk Factors

• Regulatory Compliance [medium — regulatory]: The company must comply with stringent regulations in the electromedical device industry, which can impact product development, marketing, and sales.
• Market Adoption [medium — market]: Success depends on market acceptance of its novel medical devices, facing competition and the need for physician and patient adoption.
• Product Development and Manufacturing [medium — operational]: Challenges in developing, manufacturing, and scaling production of its medical devices could affect revenue and profitability.
• Funding and Liquidity [medium — financial]: As a developing company, Nexalin may require additional funding, and its ability to secure it impacts its operational capacity and growth.

Key Financial Figures

• $0.001 — ch registered Common stock, par value $0.001 per share NXL The Nasdaq Capital Ma
• $96,000 — hod of accounting. The Company invested $96,000 in the joint venture in September 2023
• $104,000 — quity Method Investment. Wider invested $104,000. In accordance with ASC 323, the Compan
• $200,000 — this service agreement, Wider invested $200,000 to the Company. During the year ended D
• $550,000 — a charge to stock-based compensation of $550,000 and was recorded in selling, general an
• $1,500,000 — a charge to research and development of $1,500,000 and was recorded in selling, general an

Filing Documents

• nexalintech_10k.htm (10-K) — 1517KB
• nexalintech_ex31-1.htm (EX-31.1) — 12KB
• nexalintech_ex31-2.htm (EX-31.2) — 11KB
• nexalintech_ex32-1.htm (EX-32.1) — 5KB
• nexalintech_ex32-2.htm (EX-32.2) — 5KB
• 0001829126-24-001935.txt (&nbsp;) — 6253KB
• nxl-20231231.xsd (EX-101.SCH) — 42KB
• nxl-20231231_cal.xml (EX-101.CAL) — 59KB
• nxl-20231231_def.xml (EX-101.DEF) — 162KB
• nxl-20231231_lab.xml (EX-101.LAB) — 350KB
• nxl-20231231_pre.xml (EX-101.PRE) — 299KB
• nexalintech_10k_htm.xml (XML) — 836KB

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 16 Item 1B. Unresolved Staff Comments 51 Item 1C. Cybersecurity 51 Item 2.

Properties

Properties 51 Item 3.

Legal Proceedings

Legal Proceedings 52 Item 4. Mine Safety Disclosure 52 PART II Item 5. Market For the Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 53 Item 6. [Reserved] 54 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 54 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 65 Item 8.

Financial Statements and Supplemental Data

Financial Statements and Supplemental Data 65 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 65 Item 9A.

Controls and Procedures

Controls and Procedures 65 Item 9B. Other Information 66 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 66 PART III Item 10. Directors, Executive Officers and Corporate Governance 67 Item 11.

Executive Compensation

Executive Compensation 75 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 78 Item 13. Certain Relationships and Related Transactions, and Director Independence 82 Item 14. Principal Accountant Fees and Services 86 PART IV Item 15. Exhibits and Financial Statement Schedules 88 Item 16. Form 10-K Summary 89 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 statements" as that term is defined in the Private Securities Litigation Reform Act of 1995 and other federal securities laws. 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 guara

Business

Item 1. Business Overview We design and develop innovative neurostimulation products to uniquely and effectively help combat the ongoing global mental health epidemic. We developed an easy-to-administer medical device — referred to as "Generation 1" or "Gen-1" — that utilizes bioelectronic medical technology to treat anxiety and insomnia, without the need for drugs or psychotherapy. Our original Gen-1 devices are cranial electrotherapy stimulation (CES) devices that emit waveform at 4 milliamps during treatment and are presently classified by the U.S. Food and Drug Administration (the "FDA") as a Class II device. Medical professionals in the United States have utilized the Gen-1 device to administer to patients in clinical settings. While the Gen-1 device had been cleared by the FDA to treat depression, anxiety, and insomnia, three prevalent and serious diseases, because of the FDA's December 2019 reclassification of CES devices, the Gen-1 device was reclassified as a Class II device for the treatment of anxiety and insomnia. We are required to file a new application under Section 510(k) of the Federal Food, Drug and Cosmetic Act ("510(k) Application") to be approved by the FDA for the sales and marketing of our devices for the treatment of anxiety and insomnia. In the FDA's December 2019 reclassification ruling, the treatment of depression with our device will require a Class III certification and require a new PMA (premarket approval) application to demonstrate safety and effectiveness. While we continue providing services to medical professionals to support patients' use of the Gen-1 devices which were in operation prior to December 2019, we are not making new sales or new marketing efforts of Gen-1 devices. We continue to derive revenue from devices which we sold or leased prior to the FDA's December 2019 reclassification announcements. This revenue consists of monthly licensing fees and payments for the sale of electrodes. We have suspended marketing effo

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